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Title: The Compression in Top Income Inequality during the 1940s
Citation Type: Working Paper
Publication Year: 2011
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Abstract: The 1940s were a decade of sharp contraction in wage inequality, particularly at the top of the distribution. We study this narrowing using a new dataset on the compensation of top executives. Relative to average earnings, median executive pay declined 0.34 log points from 1940 to 1949.We find that government regulationincluding explicit salary restrictions and taxationhad, at best, a modest effect on top incomes during the war period. Instead, a decline in the returns to firm size and an increase in the power of labor unions contributed greatly to the compression in executive pay relative to other workers earnings.
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Authors: Molloy, Raven; Frydman, Carola
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Institution: MIT
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Publisher Location: Cambridge, Massachusetts
Data Collections: IPUMS USA
Topics: Labor Force and Occupational Structure
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