Labor mobility network and intra firm wage dispersion

In the recent discussion on productivity and how to foster it, the role of wage dispersion as determinant of workers productivity attracted much attention. But, what are the determinant of wage dispersion? In this paper, we analyze a very specific determinant of wage dispersion: job-to-job labor mobility. We focus on a geographically limited labor market and we represent the firms operating in such context as a “labor mobility network”. The latter can be formally defined as a binary directed graph where vertices indicate firms and links represent transfers of workers between firms. Some firms will be connected to each others, others will be disconnected. Since the firm’s position in the network (more or less central and close to other firms) is strictly connected with opportunities of knowledge transfers and good quality matches, its position could also be associated to intra-firm wage dispersion. Using 1990-2001 Veneto (a region of Italy) matched firm-worker data, we empirically test the existence of this association. We find the central positions in the network structure are positively associated with intra-firm wage dispersion.