A firm divide? Intrinsic and extrinsic determinants of job outcomes by firm size

Abstract This paper examines the relationship between firm size and workplace dynamics, as well as their subjective evaluation by both employees and employers. Using micro-level data for the United States and Germany, two most dissimilar cases in terms of labor market and political institutions, we show that small firms are characterized by the highest employee job satisfaction, consistent with harmonious workplace dynamics linked to intrinsic benefits. In large firms, job satisfaction is associated with substantial extrinsic material and social benefits, as well as human resource management that sustains intrinsic motivation. Workers in medium-sized firms appear to be betwixt and between , being worst off in many dimensions. For employers, the higher control , social prestige, and financial benefits of self-employment increase with firm size and effectively offset the negative effects of higher job demands . Within firms of similar size, we also document a significant polarization between employers’ and their employees’ job experiences.