It’s Where You Work: Increases in the Dispersion of Earnings across Establishments and Individuals in the United States

Barth, Erling; Bryson, Alex; Davis, James C.; Freeman, Richard B.

doi:10.1086/684045

Cited by 266 publications

(205 citation statements)

References 31 publications

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“…An important literature has developed around the increase in earnings inequality across establishments and the increase in the sorting of workers by firms (see Barth et al 2016 andSong et al 2016 on the United States). High wage establishments are employing relatively more high wage workers.…”

Section: Discussionmentioning

confidence: 99%

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The Expanding Gender Earnings Gap: Evidence from the LEHD-2000 Census

Goldin

Kerr

Olivetti

et al. 2017

American Economic Review

Self Cite

177

101

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The gender earnings gap is an expanding statistic over the lifecycle. We use the LEHD Census 2000 to understand the roles of industry, occupation, and establishment 14 years after leaving school. The gap for college graduates 26 to 39 years old expands by 34 log points, most occurring in the first 7 years. About 44 percent is due to disproportionate shifts by men into higher-earning positions, industries, and firms and about 56 percent to differential advances by gender within firms. Widening is greater for married individuals and for those in certain sectors. Non-college graduates experience less widening but with similar patterns.

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Section: Discussionmentioning

confidence: 99%

“…UI earnings include wages, salary, and taxable bonuses and are not top-coded. The virtues and deficiencies of the LEHD have been described in detail by others (see, e.g., Barth et al 2016), thus we will be succinct.…”

Section: Exploring the Expanding Gender Earningsmentioning

confidence: 92%

The Expanding Gender Earnings Gap: Evidence from the LEHD-2000 Census

Goldin

Kerr

Olivetti

et al. 2017

American Economic Review

Self Cite

177

101

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“…A natural question is whether some of these productivity di erences spill over to wages. The prima facie case for such a link seems quite strong: a number of recent studies show that trends in aggregate wage dispersion closely track trends in the dispersion of productivity across workplaces (Dunne et al, 2004;Faggio, Salvanes, and Van Reenen, 2010;Barth et al 2016). However, these aggregate relationships are potentially driven in part by changes in the degree to which di erent groups of workers are assigned to di erent rms.…”

Section: This Reviewmentioning

confidence: 99%

Firms and Labor Market Inequality: Evidence and Some Theory

Card¹,

Cardoso²,

Heining

et al. 2018

Journal of Labor Economics

529

173

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We review the literature on firm-level drivers of labor market inequality. There is strong evidence from a variety of fields that standard measures of productivity -like output per worker or total factor productivity -vary substantially across firms, even within narrowlydefined industries. Several recent studies note that rising trends in the dispersion of productivity across firms mirror the trends in the wage inequality across workers. Two distinct literatures have searched for a more direct link between these two phenomena. The first examines how wages are affected by differences in employer productivity. Studies that focus on firm-specific productivity shocks and control for the non-random sorting of workers to more and less productive firms typically find that a 10% increase in value-added per worker leads to somewhere between a 0.5% and 1.5% increase in wages. A second literature focuses on firm-specific wage premiums, using the wage outcomes of job changers. This literature also concludes that firm pay setting is important for wage inequality, with many studies finding that firm wage effects contribute approximately 20% of the overall variance of wages. To interpret these findings, we develop a model where workplace environments are viewed as imperfect substitutes by workers, and firms set wages with some degree of market power. We show that simple versions of this model can readily match the stylized empirical findings in the literature regarding rent-sharing elasticities and the structure of firm-specific pay premiums. Does where you work determine how much you earn? In the standard competitive labor market model rms take market wages as given and rm-speci c heterogeneity in uences who is hired, but not the level of pay of any particular worker. The pervasive in uence of this perspective is evident in major reviews of the wage inequality literature (Katz and Autor, 1999;Goldin and Katz, 2009;Acemoglu and Autor, 2011), which focus almost exclusively on the role of market-level skill prices in driving inequality trends. 1 This view stands in stark contrast to the Industrial Organization literature, which typically models markets as imperfectly competitive (Tirole, 1988;Pakes, 2016). Though economists seem to agree that part of the variation in the prices of cars and breakfast cereal is due to factors other than marginal cost, the possibility that wages re ect anything other than skill remains highly controversial. Terms of use: Documents inThe gr...

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“…A growing body of empirical research on income inequality, for example, has established that an understanding of firm-level differences is critical because wage differences are larger between companies than within them (e.g. Abowd, McKinney, & Zhao, 2017;Barth, Bryson, Davis, & Freeman, 2016). Song, Price, Guvenen, Bloom, and Von Wachter (2015) found that over two-thirds of the increase in earnings inequality from 1981 to 2013 can be accounted for by the rising variance of earnings between firms and only one-third within firms.…”

Section: Introductionmentioning

confidence: 99%

A capability theory of the firm: an economics and (Strategic) management perspective

Teece

2017

New Zealand Economic Papers

224

180

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The business enterprise is the prime institution in economic development and growth; yet, until recently, mainstream economics has mostly treated firms as homogeneous black boxes managed by untrustworthy agents. Using economic principles, the field of strategic management has developed a nuanced approach to understanding how firms are created, organized, and grow; how they innovate and compete; and how managers manage. That approach has yielded a theoretical framework known as 'dynamic capabilities'. Contrasts are drawn between dynamic capabilities and other approaches to the theory of the firm, including transaction cost economics and agency theory. The application of capability theory allows intellectual blinders to be removed and an understanding of differential firm-level resource allocation and performance to emerge. This brings a richer conceptual understanding of the nature of the business enterprise and its management consistent with evolutionary and behavioural economics. Policy insights into governance, inequality, economic development, and the wealth of nations follow.

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It’s Where You Work: Increases in the Dispersion of Earnings across Establishments and Individuals in the United States

Cited by 266 publications

References 31 publications

The Expanding Gender Earnings Gap: Evidence from the LEHD-2000 Census

The Expanding Gender Earnings Gap: Evidence from the LEHD-2000 Census

Firms and Labor Market Inequality: Evidence and Some Theory

A capability theory of the firm: an economics and (Strategic) management perspective

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