It's Where You Work: Increases In Earnings Dispersion Across Establishments And Individuals In The U.S.
September 2014
Working Paper Number:
CES-14-33
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.
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:
endogeneity,
payroll,
earnings,
employee,
employ,
employed,
labor,
proprietor,
establishment,
heterogeneity,
profit,
revenue,
wages productivity,
salary,
effect wages,
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Financial, Insurance and Real Estate Industries,
Current Population Survey,
Business Services,
Longitudinal Business Database,
1940 Census,
Social Security,
Economic Census,
North American Industry Classification System,
Longitudinal Employer Household Dynamics
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