Firming Up Inequality
Jae Song, David J. Price, Fatih Guvenen, Nicholas Bloom, Till von Wachter
Summary
Using US Social Security earnings records linked to employers, the authors decompose the rise in earnings inequality over 1978-2013 into within-firm and between-firm components. They find that most of the increase in earnings dispersion occurred between firms rather than within them, reflecting growing differences in average pay across employers and increased sorting of high-paid workers into high-paying firms. Within the largest firms, however, pay dispersion among workers remained relatively stable.
Key findings
- The bulk of the rise in US earnings inequality is accounted for by widening pay differences between firms rather than within firms.
- Increasing employee segregation and assortative matching (high earners working with other high earners) drove much of the between-firm component.
- Within the very largest firms, the distribution of pay across workers changed comparatively little.
Subjects & keywords
Cite this paper
Jae Song, David J. Price, Fatih Guvenen, Nicholas Bloom, & Till von Wachter (2019). Firming Up Inequality. The Quarterly Journal of Economics. https://doi.org/10.1093/qje/qjy025
@article{song2019firming,
author = {Jae Song and David J. Price and Fatih Guvenen and Nicholas Bloom and Till von Wachter},
title = {Firming Up Inequality},
journal = {The Quarterly Journal of Economics},
year = {2019},
doi = {10.1093/qje/qjy025},
url = {https://doi.org/10.1093/qje/qjy025}
}