earticle

영어

This paper examines firm size-wage differentials on the business cycle. According to Korean data for the last 20 years, the wage gap, the wage difference between big-size firms and small-size firms, widens on the boom and shrinks on the recession. Our purpose is theoretically to analyze this phenomenon by using a two-sector macroeconomic model. We recognize that the changes of the wage gap on the business cycle come from different wage-setting rules between two sectors, and assume that big-size firms use efficiency wages, but the market wage work on small-size firms. Under this assumption, we show that the wage gap is procyclical.