Occupations and careers within organizations: Do organizations facilitate unequal wage growth?

Abstract

Recent research suggests that occupations and organizations intersect during the formation of wage inequality. Using administrative data from the Netherlands, I investigate whether workers who are employed in different occupations experience unequal wage growth when staying in an organization. Results reveal that workers in professional and managerial positions realize larger wage growth than workers who work initially in lower-status occupations. After six years of staying at the same organization, predicted wage growth rates vary between 5.44% for production workers and 10.18% for technical professionals. The findings indicate that occupations compound present and future wage advantages at the organizational level. I test whether occupational sorting across organizations with differing pay quality mediates part of the occupation-based heterogeneity in wage growth. The results show that occupational sorting is marked but that sorting explains only up to around 8% of inequality in firm-internal wage growth between different occupational classes in the Dutch labor market.