EconPapers    
Economics at your fingertips  
 

Firming up inequality

Jae Song (), David J. Price, Fatih Guvenen () and Nicholas Bloom ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Earnings inequality in the United States has increased rapidly over the last three decades, but little is known about the role of firms in this trend. For example, how much of the rise in earnings inequality can be attributed to rising dispersion between firms in the average wages they pay, and how much is due to rising wage dispersion among workers within firms? Similarly, how did rising inequality affect the wage earnings of different types of workers working for the same employer—men vs. women, young vs. old, new hires vs. senior employees, and so on? To address questions like these, we begin by constructing a matched employer-employee data set for the United States using administrative records. Covering all U.S. firms between 1978 to 2012, we show that virtually all of the rise in earnings dispersion between workers is accounted for by increasing dispersion in average wages paid by the employers of these individuals. In contrast, pay differences within employers have remained virtually unchanged, a finding that is robust across industries, geographical regions, and firm size groups. Furthermore, the wage gap between the most highly paid employees within these firms (CEOs and high level executives) and the average employee has increased only by a small amount, refuting oft-made claims that such widening gaps account for a large fraction of rising inequality in the population.

Keywords: Inequality; productivity and firms (search for similar items in EconPapers)
JEL-codes: M1 O2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec
Date: 2015-05
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (11) Track citations by RSS feed

Downloads: (external link)
http://eprints.lse.ac.uk/62587/ Open access version. (application/pdf)

Related works:
Working Paper: Firming Up Inequality (2015) Downloads
Working Paper: Firming Up Inequality (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:62587

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Series data maintained by LSERO Manager ().

 
Page updated 2017-10-06
Handle: RePEc:ehl:lserod:62587