In the Land of AKM: Explaining the Dynamics of Wage Inequality in France

D. Babet, Olivier Godechot and M.G. Palladino
Additional contact information
D. Babet: Insee
M.G. Palladino: Banque de France; Sciences Po

Documents de Travail de l'Insee - INSEE Working Papers from Institut National de la Statistique et des Etudes Economiques

Abstract: We use a newly built and quasi-exhaustive matched employer-employee database to study firms contribution towage inequalities in France. We employ the Abowd, Kramarz, and Margolis (1999) model (hereafter AKM) to decompose log-wage variance into between- and within-firm components. Our analysis covering the period from 2002 to 2019 reveals a significant increase in between-firm inequalities, driven by a growing tendency of high-wage workers to cluster together in high premium firms. These phenomena are directly associated with changes in firms demographics and workforce composition. Over the same period, bottom earnings percentiles increased more than the rest of the distribution, in line with the rise in the legal minimum wage. As a result, within-firm inequalities decreased, almost offsetting the rising between-firm inequalities.

Keywords: Wage inequality; firm wage premium; AKM decomposition (search for similar items in EconPapers)
JEL-codes: C33 E24 J31 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-bec and nep-eur
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Citations: View citations in EconPapers (2)

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https://www.bnsp.insee.fr/ark:/12148/bc6p08d94gk?rk=450646;0 Document de travail de la DESE numero 2023/20 (application/pdf)

Related works:
Working Paper: In the Land of AKM: Explaining the Dynamics of Wage Inequality in France (2023)
Working Paper: In the Land of AKM: Explaining the Dynamics of Wage Inequality in France (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:nse:doctra:2023-20

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