There is a large empirical literature that finds a positive relationship between firm size and wages although the reasons why this is so are less...

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There is a large empirical literature that finds a positive relationship between firm sizeand wages although the reasons why this is so are less clear; see for example Brown andMedoff (1989). To investigate whether the same relationship exists in Australia, a sampleof workers in Australian manufacturing firms are used. The cross-sectional data werecollected as part of the Issues in Multicultural Australia survey, conducted by the Officeof Multicultural Affairs (1988). The sample used for analysis is restricted to full-time(working > 24 hours/week) Australian male employees, aged 18—65 years. The main outcome of interest is the workers average hourly wage (wage) and the size ofthe firm is measured by the number of employees (in hundreds) at their place of work(size). Information was also collected on the worker’s years of education (education),years of work experience (experience), years with the current employee (tenure) and adummy variable indicating whether the worker was a supervisor or not (supervisor).