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Title: Firming Up Inequality

Citation Type: Miscellaneous

Publication Year: 2016

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Abstract: Using a massive, new, matched employer-employee database that we construct for the United States, we show that the rise in earnings inequality between workers over the last three decades has primarily been a between-firm phenomenon. Over two-thirds of the increase in earnings inequality from 1981 to 2013 can be accounted for by the rising variance of earnings between firms and only one-third by the rising variance within firms. This rise in between-firm inequality was particularly strong in smaller and medium-sized firms (explaining 84% for firms with fewer than 10,000 employees). In contrast, in the very largest firms with 10,000+ employees, almost half of the increase in inequality took place within firms, driven by both declines in earnings for employees below the median and sharp rises for the top 50 or so best-paid employees. Finally, examining the mobility of employees across firms, we find that the increase in between-firm inequality has been driven by increased employee segregationhigh- and low-paid employees are increasingly clustering in different firms.

Url: http://www.econ.ucla.edu/tvwachter/papers/FUI_website_NBER_SI.pdf

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Authors: Song, Jae; Price, David J; Guvenen, Fatih; Bloom, Nicholas; von Wachter, Till

Publisher: University of California, Los Angeles

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure

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