The Role of Industries in Rising Inequality

Juraj Briskar (), Edoardo Di Porto, José V. Rodriguez Mora () and Cristina Tealdi
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Juraj Briskar: LSE
José V. Rodriguez Mora: University of Edinburgh

No 16693, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We analyse thirty years of Italian private sector employment data (1985-2018) to study the dynamics of rising earnings inequality. The total variance surged by 10 log points, with 55% occurring between industries, particularly in a few low-paid service sectors. Workers with low earnings ability showed increased likelihood of working in industries with low average firm premium (sorting) together with other low-earning workers (segregation). Strikingly, parallels with the US emerge. In both, inequality increased predominantly between industries and concentrated within a small number of sectors. Italy's increase primarily stems from low-paying sectors, diverging from the more balanced growth observed in the US across high-paying and low-paying industries. Our findings suggest that despite institutional differences similar underlying forces are at work.

Keywords: earnings inequality; industries; sorting; segregation (search for similar items in EconPapers)
JEL-codes: E02 E25 J01 (search for similar items in EconPapers)
Pages: 76 pages
Date: 2023-12
New Economics Papers: this item is included in nep-com, nep-eur and nep-lab
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