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

Damien Babet, Olivier Godechot and Marco G. Palladino

Working papers from Banque de France

Abstract: We use a newly constructed and quasi-exhaustive matched employer-employee database to study the contribution of firms to wage inequality in France. We implement a simple and tractable correction for the limited mobility bias. Our analysis, covering the period 2002-2019, reveals an increase in between-firm inequality, mainly due to the growing clustering of workers with similar market value. These phenomena are associated with increasing occupational specialization at the firm level. Our results highlight the importance of bias-corrected AKM estimates of the Abowd, Kramarz et Margolis (1999) model –hereafter AKM- in capturing the dynamics of wage inequality, and show how boThéobservable job types and unobservable individual characteristics contribute to these patterns.Classification-JEL: E31, E62

Keywords: Wage Inequality; Worker Segregation; Occupational Sorting; Employer-Employee Data (search for similar items in EconPapers)
Pages: 78 pages
Date: 2025
New Economics Papers: this item is included in nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:987

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