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Fact of the Week: Employees at Large Firms Perform More Non-Routine Problem-Solving Than Small Firm Employees.

Fact of the Week: Employees at Large Firms Perform More Non-Routine Problem-Solving Than Small Firm Employees.

December 23, 2024

Source: Micole De Vera and Javier Garcia-Brazales, “Establishment Size and the Task Content of Jobs: Evidence from 46 Countries,” Institute for Labor Economics, no. 17319 (September 2024).

Commentary: In a recent report, Micole De Vera and Javier Garcia-Brazales analyzed how firm size relates to work tasks to discover how firm size impacts employee tasks. The two researchers find that contrary to conventional wisdom, employees at large firms, despite having narrowly defined jobs, perform more non-routine analytical tasks and use information and communication technologies (ICT) more intensively than equivalent workers at small firms. Non-routine analytical tasks include problem-solving activities that require thinking and analysis without established procedures. The researchers hypothesize that larger firms are inherently more complex and require more complicated machinery, such as ICTs, and more complex problem-solving in order to deal with large customer bases. They also find an economically significant wage premium (EWSP) of 15 percent for employees of larger establishments. Ten percent of the EWSP can be explained by heterogeneity in the task content of jobs, meaning employees of large firms receive a wage premium for performing non-routine analytical tasks and using ICTs at a greater rate.

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