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The Causes of Increasing Interindustry Wage Dispersion in the United States

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  • Linda A. Bell
  • Richard B. Freeman

Abstract

Using establishment-level data from a variety of sources, this study documents and analyzes the consistent rise in interindustry wage dispersion in the United States between 1970 and 1987. The authors attribute about 60% of the rise in this measure of wage dispersion to competitive market factors, such as changes in the demographic and occupational mix of industrial sectors. They find, however, that noncompetitive factors also play an important part in this trend. The most important noncompetitive factor is a strong link between the long-term trends in industry wages and productivity growth, which appears to stem largely from rent-sharing behavior among industries.

Suggested Citation

  • Linda A. Bell & Richard B. Freeman, 1991. "The Causes of Increasing Interindustry Wage Dispersion in the United States," ILR Review, Cornell University, ILR School, vol. 44(2), pages 275-287, January.
    • Handle: RePEc:sae:ilrrev:v:44:y:1991:i:2:p:275-287
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    Cited by:

    1. Judith Fields & Edward N. Wolff, 1997. "Gender Wage Differentials, Affirmative Action, and Employment Growth on the Industry Level," Macroeconomics 9711005, University Library of Munich, Germany.
    2. Benjamin Lochner & Bastian Schulz, 2024. "Firm Productivity, Wages, and Sorting," Journal of Labor Economics, University of Chicago Press, vol. 42(1), pages 85-119.
    3. Erling Barth & Alex Bryson & James C. Davis & Richard Freeman, 2016. "It's Where You Work: Increases in the Dispersion of Earnings across Establishments and Individuals in the United States," Journal of Labor Economics, University of Chicago Press, vol. 34(S2), pages 67-97.
    4. Björklund, Anders & Bratsberg, Bernt & Eriksson, Tor & Jäntti, Markus & Raaum, Oddbjørn, 2004. "Inter-Industry Wage Differentials and Unobserved Ability: Siblings Evidence from Five Countries," IZA Discussion Papers 1080, Institute of Labor Economics (IZA).

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