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The Role of Industries in Rising Inequality

Author

Listed:
  • Briskar, Juraj

    (LSE)

  • di Porto, Edoardo

    (University of Naples Federico II)

  • Rodriguez Mora, José V.

    (University of Edinburgh)

  • Tealdi, Cristina

    (Heriot-Watt University, Edinburgh)

Abstract

We analyse thirty years of Italian private sector employment data (1985-2018) to study the dynamics of rising earnings inequality. The total variance surged by 10 log points, with 55% occurring between industries, particularly in a few low-paid service sectors. Workers with low earnings ability showed increased likelihood of working in industries with low average firm premium (sorting) together with other low-earning workers (segregation). Strikingly, parallels with the US emerge. In both, inequality increased predominantly between industries and concentrated within a small number of sectors. Italy's increase primarily stems from low-paying sectors, diverging from the more balanced growth observed in the US across high-paying and low-paying industries. Our findings suggest that despite institutional differences similar underlying forces are at work.

Suggested Citation

  • Briskar, Juraj & di Porto, Edoardo & Rodriguez Mora, José V. & Tealdi, Cristina, 2023. "The Role of Industries in Rising Inequality," IZA Discussion Papers 16693, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16693
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    More about this item

    Keywords

    earnings inequality; industries; sorting; segregation;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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