IDEAS home Printed from https://ideas.repec.org/p/por/cetedp/1202.html
   My bibliography  Save this paper

Establishment Turnover and the Evolution of Wage Inequality

Author

Listed:
  • Anabela Carneiro

    (Universidade do Porto and CEF.UP)

  • José Varejão

    (Universidade do Porto and CEF.UP)

Abstract

We consider the determinants of the evolution of wage inequality in the context of the literature on entry and exit of establishments. Using several measures of wage inequality (overall, within-group, and between-groups), we conclude that shutdowns reduce overall and within-group inequality because they eliminate low-pay jobs. Startups increase wage inequality between age and, especially, education groups, because newly-created establishments make staffing choices that are different from those made by continuously-operating establishments and establishments that shut down.

Suggested Citation

  • Anabela Carneiro & José Varejão, 2012. "Establishment Turnover and the Evolution of Wage Inequality," CEF.UP Working Papers 1202, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:cetedp:1202
    as

    Download full text from publisher

    File URL: http://www.fep.up.pt/investigacao/cef.up/WP/2012/2012_02_wp.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Anabela Carneiro & Pedro Portugal, 2008. "Wages and the Risk of Displacement," Research in Labor Economics, in: Work, Earnings and Other Aspects of the Employment Relation, pages 251-276, Emerald Group Publishing Limited.
    2. Martins, Pedro S. & Pereira, Pedro T., 2004. "Does education reduce wage inequality? Quantile regression evidence from 16 countries," Labour Economics, Elsevier, vol. 11(3), pages 355-371, June.
    3. Peter Gottschalk & Mary Joyce, 1998. "Cross-National Differences In The Rise In Earnings Inequality: Market And Institutional Factors," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 489-502, November.
    4. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 367-397.
    5. Haltiwanger, John C. & Lane, Julia I. & Spletzer, James R., 2007. "Wages, productivity, and the dynamic interaction of businesses and workers," Labour Economics, Elsevier, vol. 14(3), pages 575-602, June.
    6. Cardoso, Ana Rute, 2007. "Jobs for young university graduates," Economics Letters, Elsevier, vol. 94(2), pages 271-277, February.
    7. Lambson, V.E., 1989. "Industry Evolution With Sunk Costs And Uncertian Market Conditions," Working papers 8904, Wisconsin Madison - Social Systems.
    8. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
    9. Robert E. Baldwin & Glen G. Cain, 2000. "Shifts In Relative U.S. Wages: The Role Of Trade, Technology, And Factor Endowments," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 580-595, November.
    10. José M. Varejão, 2003. "Job and worker flows in high adjustment cost settings," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 2(1), pages 37-51, April.
    11. Gilles Duranton & Vassilis Monastiriotis, 2002. "Mind the Gaps: The Evolution of Regional Earnings Inequalities in the U.K., 1982–1997," Journal of Regional Science, Wiley Blackwell, vol. 42(2), pages 219-256, May.
    12. Centeno, Mario & Novo, Alvaro A., 2009. "When Supply Meets Demand: Wage Inequality in Portugal," IZA Discussion Papers 4592, Institute of Labor Economics (IZA).
    13. Pedro Portugal & Olivier Blanchard, 2001. "What Hides Behind an Unemployment Rate: Comparing Portuguese and U.S. Labor Markets," American Economic Review, American Economic Association, vol. 91(1), pages 187-207, March.
    14. Chinhui Juhn, 1999. "Wage Inequality and Demand for Skill: Evidence from Five Decades," ILR Review, Cornell University, ILR School, vol. 52(3), pages 424-443, April.
    15. Richard E. Caves, 1998. "Industrial Organization and New Findings on the Turnover and Mobility of Firms," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 1947-1982, December.
    16. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jose Varejao & Anabela Carneiro, 2005. "Plant Turnover and the Evolution of Regional Inequalities," ERSA conference papers ersa05p709, European Regional Science Association.
    2. Sarah Voitchovsky & Bertrand Maitre & Brian Nolan, 2012. "Wage Inequality in Ireland’s “Celtic Tiger” Boom," The Economic and Social Review, Economic and Social Studies, vol. 43(1), pages 99-133.
    3. Daron Acemoglu, 2003. "Cross-Country Inequality Trends," Economic Journal, Royal Economic Society, vol. 113(485), pages 121-149, February.
    4. James Harrigan & Ariell Reshef, 2015. "Skill‐biased heterogeneous firms, trade liberalization and the skill premium," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(3), pages 1024-1066, August.
    5. Dumont, Michel, 2004. "The Impact of International Trade with Newly Industrialised Countries on the Wages and Employment of Low-Skilled and High-Skilled Workers in the European Union," Thesis Commons bmxag, Center for Open Science.
    6. Jeff Borland, 2000. "Economic Explanations of Earnings Distribution Trends in the International Literature and Application to New Zealand," Treasury Working Paper Series 00/16, New Zealand Treasury.
    7. Almeida, André & Figueiredo, Hugo & Cerejeira, João & Portela, Miguel & Sá, Carla & Teixeira, Pedro, 2017. "Returns to Postgraduate Education in Portugal: Holding on to a Higher Ground?," GLO Discussion Paper Series 44, Global Labor Organization (GLO).
    8. Carlos Oliveira, 2024. "Income and wage inequality in democratic Portugal, 1974–2020," Fiscal Studies, John Wiley & Sons, vol. 45(3), pages 393-414, September.
    9. Salverda, Wiemer & Checchi, Daniele, 2014. "Labour-Market Institutions and the Dispersion of Wage Earnings," IZA Discussion Papers 8220, Institute of Labor Economics (IZA).
    10. Haskel, Jonathan E. & Slaughter, Matthew J., 2002. "Does the sector bias of skill-biased technical change explain changing skill premia?," European Economic Review, Elsevier, vol. 46(10), pages 1757-1783, December.
    11. Cristiano Perugini & Gaetano Martino, 2008. "Income Inequality Within European Regions: Determinants And Effects On Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(3), pages 373-406, September.
    12. Verdugo, Gregory, 2014. "The great compression of the French wage structure, 1969–2008," Labour Economics, Elsevier, vol. 28(C), pages 131-144.
    13. Taiji Furusawa & Hideo Konishi & Duong Lam Anh Tran, 2020. "International Trade and Income Inequality," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(3), pages 993-1026, July.
    14. Lex Borghans & Bas ter Weel, 2008. "Understanding the Technology of Computer Technology Diffusion: Explaining Computer Adoption Patterns and Implications for the Wage Structure," Journal of Income Distribution, Ad libros publications inc., vol. 17(3-4), pages 37-70, September.
    15. Henrekson, Magnus & Rosenberg, Nathan, 2000. "Incentives for Academic Entrepreneurship and Economic Performance: Sweden and the United States," SSE/EFI Working Paper Series in Economics and Finance 362, Stockholm School of Economics.
    16. Monte, Ferdinando, 2011. "Skill bias, trade, and wage dispersion," Journal of International Economics, Elsevier, vol. 83(2), pages 202-218, March.
    17. Nico Voigtlaender, 2009. "Many Sectors Meet More Skills: Intersectoral Linkages and the Skill Bias of Technology," 2009 Meeting Papers 1136, Society for Economic Dynamics.
    18. Gulgun Bayaz Ozturk, 2011. "Supply and Demand Factors in Understanding the Educational Earnings Differentials: West Germany and the United States," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 8(2), pages 235-263, December.
    19. Francine D. Blau & Lawrence M. Kahn, 2003. "Understanding International Differences in the Gender Pay Gap," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 106-144, January.
    20. Jorge Saba Arbache, 2001. "Trade Liberalisation and Labor Markets in Developing Countries: Theory and Evidence," Studies in Economics 0112, School of Economics, University of Kent.

    More about this item

    Keywords

    Wage Inequality; Labor Demand; Establishment Turnover.;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:por:cetedp:1202. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ana Bonanca (email available below). General contact details of provider: https://edirc.repec.org/data/fepuppt.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.