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Between Firm Changes in Earnings Inequality: The Dominant Role of Industry Effects

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  • John Haltiwanger
  • James R. Spletzer

Abstract

We find that most of the rising between firm earnings inequality that dominates the overall increase in inequality in the U.S. is accounted for by industry effects. These industry effects stem from rising inter-industry earnings differentials and not from changing distribution of employment across industries. We also find the rising inter-industry earnings differentials are almost completely accounted for by occupation effects. These results link together the key findings from separate components of the recent literature: one focuses on firm effects and the other on occupation effects. The link via industry effects challenges conventional wisdom.

Suggested Citation

  • John Haltiwanger & James R. Spletzer, 2020. "Between Firm Changes in Earnings Inequality: The Dominant Role of Industry Effects," Working Papers 20-08, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:20-08
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    Cited by:

    1. Brand, Claus & Obstbaum, Meri & Coenen, Günter & Sondermann, David & Lydon, Reamonn & Ajevskis, Viktors & Hammermann, Felix & Angino, Siria & Hernborg, Nils & Basso, Henrique & Hertweck, Matthias & Bi, 2021. "Employment and the conduct of monetary policy in the euro area," Occasional Paper Series 275, European Central Bank.
    2. Haltiwanger, John C. & Hyatt, Henry R. & Spletzer, James R., 2022. "Industries, Mega Firms, and Increasing Inequality," IZA Discussion Papers 15197, Institute of Labor Economics (IZA).
    3. John Haltiwanger & James R. Spletzer, 2021. "Rising Between-Firm Inequality and Declining Labor Market Fluidity: Evidence of a Changing Job Ladder," NBER Chapters, in: Measuring Distribution and Mobility of Income and Wealth, pages 45-67, National Bureau of Economic Research, Inc.
    4. Freund, L. B., 2022. "Superstar Teams: The Micro Origins and Macro Implications of Coworker Complementarities," Janeway Institute Working Papers 2235, Faculty of Economics, University of Cambridge.
    5. N. M. Rozanova, 2021. "Methodological Issues of Modern Competition Policy," Studies on Russian Economic Development, Springer, vol. 32(5), pages 492-498, September.

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    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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