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It’s where you work: increases in earnings dispersion across establishments and individuals in the US

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  • Barth, Erling
  • Bryson, Alex
  • Davis, James C.
  • Freeman, Richard

Abstract

This paper links data on establishments and individuals to analyze the role of establishments in the increase in inequality that has become a central topic in economic analysis and policy debate. It decomposes changes in the variance of ln earnings among individuals into the part due to changes in earnings among establishments and the part due to changes in earnings within-establishments and finds that much of the 1970s-2010s increase in earnings inequality results from increased dispersion of the earnings among the establishments where individuals work. It also shows that the divergence of establishment earnings occurred within and across industries and was associated with increased variance of revenues per worker. Our results direct attention to the fundamental role of establishment-level pay setting and economic adjustments in earnings inequality.

Suggested Citation

  • Barth, Erling & Bryson, Alex & Davis, James C. & Freeman, Richard, 2014. "It’s where you work: increases in earnings dispersion across establishments and individuals in the US," LSE Research Online Documents on Economics 60604, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:60604
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    File URL: http://eprints.lse.ac.uk/60604/
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. IT’s WHERE YOU WORK: INCREASES IN EARNINGS DISPERSION ACROSS ESTABLISHMENTS AND INDIVIDUALS IN THE U.S.
      by maximorossi in NEP-LTV blog on 2014-11-05 17:41:48

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    Cited by:

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    3. Mak, Eric & Siow, Aloysius, 2017. "Occupational Choice and Matching in the Labor Market," IZA Discussion Papers 10584, Institute of Labor Economics (IZA).
    4. Alessandra Bonfiglioli & Rosario Crinò & Gino Gancia, 2018. "Betting on Exports: Trade and Endogenous Heterogeneity," Economic Journal, Royal Economic Society, vol. 128(609), pages 612-651, March.
    5. James Spletzer & Elizabeth Weber Handwerker, 2015. "The Role of Establishments and the Concentration of Occupations in Wage Inequality," Working Papers id:7427, eSocialSciences.
    6. Berlingieri, Giuseppe & Blanchenay, Patrick & Criscuolo, Chiara, 2024. "The great divergence(s)," Research Policy, Elsevier, vol. 53(3).
    7. Hyatt, Henry R. & Spletzer, James R., 2017. "The recent decline of single quarter jobs," Labour Economics, Elsevier, vol. 46(C), pages 166-176.
    8. Sanjay K. Chugh & Christian Merkl, 2016. "Efficiency And Labor Market Dynamics In A Model Of Labor Selection," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57(4), pages 1371-1404, November.
    9. Erica L. Groshen & Harry J. Holzer, 2021. "Labor Market Trends and Outcomes: What Has Changed since the Great Recession?," The ANNALS of the American Academy of Political and Social Science, , vol. 695(1), pages 49-69, May.
    10. Daniel Baumgarten & Gabriel Felbermayr & Sybille Lehwald, 2020. "Dissecting Between‐Plant and Within‐Plant Wage Dispersion: Evidence from Germany," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 59(1), pages 85-122, January.
    11. Miklós Koren & Márton Csillag, 2017. "Machines and Machinists: Importing Skill-Biased Technology," CEU Working Papers 2017_1, Department of Economics, Central European University.
    12. Holger M. Mueller & Paige P. Ouimet & Elena Simintzi, 2015. "Wage Inequality and Firm Growth," LIS Working papers 632, LIS Cross-National Data Center in Luxembourg.
    13. Bofinger, Peter & Schnabel, Isabel & Feld, Lars P. & Schmidt, Christoph M. & Wieland, Volker, 2014. "Mehr Vertrauen in Marktprozesse. Jahresgutachten 2014/15 [More confidence in market processes. Annual Report 2014/15]," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201415, September.
    14. Ugo Pagano, 2016. "Knowledge as a Global Common and the Crisis of the Learning Economy," Department of Economics University of Siena 743, Department of Economics, University of Siena.
    15. Annette Bernhardt & Rosemary Batt & Susan Houseman & Eileen Appelbaum, 2016. "Working Paper: Domestic Outsourcing in the United States: A Research Agenda to Assess Trends and Effects on Job Quality," CEPR Reports and Issue Briefs 2016-03, Center for Economic and Policy Research (CEPR).
    16. André Cieplinski, 2017. "Employee Control, Work Content and Wages," Department of Economics University of Siena 775, Department of Economics, University of Siena.
    17. Ines Wagner & Mari Teigen, 2022. "Egalitarian inequality: Gender equality and pattern bargaining," Gender, Work and Organization, Wiley Blackwell, vol. 29(2), pages 486-501, March.
    18. Ethan Rouen, 2017. "Rethinking Measurement of Pay Disparity and its Relation to Firm Performance," Harvard Business School Working Papers 18-007, Harvard Business School.
    19. Emilien Gouin-Bonenfant, 2018. "Productivity Dispersion, Between-firm Competition and the Labor Share," 2018 Meeting Papers 1171, Society for Economic Dynamics.
    20. Moser, Christian, 2015. "Firms as Drivers of Growth and (In-)Equality," MPRA Paper 95387, University Library of Munich, Germany.
    21. Thor Berger & Carl Benedikt Frey, 2016. "Structural Transformation in the OECD: Digitalisation, Deindustrialisation and the Future of Work," OECD Social, Employment and Migration Working Papers 193, OECD Publishing.

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    More about this item

    Keywords

    Earnings; earnings inequality; productivity;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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