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Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation

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  • Fredrik Andersson
  • Elizabeth E. Davis
  • Matthew L. Freedman
  • Julia I. Lane
  • Brian P. Mccall
  • Kristin Sandusky

Abstract

This paper exploits longitudinal employer-employee matched data from the U.S. Census Bureau to investigate the contribution of worker and firm reallocation to changes in earnings inequality within and across industries between 1992 and 2003. We find that factors that cannot be measured using standard cross-sectional data, including the entry and exit of firms and the sorting of workers across firms, are important sources of changes in earnings distributions over time. Our results also suggest that the dynamics driving changes in earnings inequality are heterogeneous across industries.

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File URL: http://hdl.handle.net/10.1111/10.1111/j.1468-232X.2012.00697.x
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Bibliographic Info

Article provided by Wiley Blackwell in its journal Industrial Relations: A Journal of Economy and Society.

Volume (Year): 51 (2012)
Issue (Month): 4 (October)
Pages: 779-810

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Handle: RePEc:bla:indres:v:51:y:2012:i:4:p:779-810

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References

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  1. Haltiwanger, John C. & Lane, Julia I. & Spletzer, James R., 2007. "Wages, productivity, and the dynamic interaction of businesses and workers," Labour Economics, Elsevier, vol. 14(3), pages 575-602, June.
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Cited by:
  1. David Card & Jörg Heining & Patrick Kline, 2012. "Workplace Heterogeneity and the Rise of West German Wage Inequality," NBER Working Papers 18522, National Bureau of Economic Research, Inc.

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