Wages in high-tech start-ups – Do academic spin-offs pay a wage premium?

Abstract

Due to their origin in universities, academic spin-offs operate at the forefront of technological development. Therefore, academic spin-offs exhibit a skill-biased labour demand, i.e. academic spin-offs have a high demand for employees with cutting-edge knowledge and technical skills. In order to accommodate this demand, academic spin-offs may have to pay a relative wage premium compared to other high-tech start-ups. However, neither a comprehensive theoretical assessment nor the empirical literature on wages in start-ups unambiguously predicts the existence and the direction of wage differentials between academic spin-offs and non-spin-offs. This paper addresses this research gap and examines empirically whether or not academic spin-offs pay their employees a wage premium. Using a unique linked employer-employee data set of German high-tech start-ups, we estimate Mincer-type wage regressions applying the Hausman-Taylor panel estimator. Our results show that academic spin-offs do not pay a wage premium in general. However, a notable exception to this general result is that academic spin-offs that commercialise new scientific results or methods pay a wage premium to employees with links to the university sector − either as university graduates or as student workers.