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Establishment Turnover and the Evolution of Wage Inequality

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  • Anabela Carneiro

    ()
    (Universidade do Porto and CEF.UP)

  • José Varejão

    ()
    (Universidade do Porto and CEF.UP)

Abstract

We consider the determinants of the evolution of wage inequality in the context of the literature on entry and exit of establishments. Using several measures of wage inequality (overall, within-group, and between-groups), we conclude that shutdowns reduce overall and within-group inequality because they eliminate low-pay jobs. Startups increase wage inequality between age and, especially, education groups, because newly-created establishments make staffing choices that are different from those made by continuously-operating establishments and establishments that shut down.

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Bibliographic Info

Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series CEF.UP Working Papers with number 1202.

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Length: 30 pages
Date of creation: May 2012
Date of revision:
Handle: RePEc:por:cetedp:1202

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Keywords: Wage Inequality; Labor Demand; Establishment Turnover.;

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  1. Carneiro, Anabela & Portugal, Pedro, 2006. "Wages and the Risk of Displacement," IZA Discussion Papers 1926, Institute for the Study of Labor (IZA).
  2. Robert E. Baldwin & Glen G. Cain, 2000. "Shifts In Relative U.S. Wages: The Role Of Trade, Technology, And Factor Endowments," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 580-595, November.
  3. Chinhui Juhn, 1999. "Wage inequality and demand for skill: Evidence from five decades," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 52(3), pages 424-443, April.
  4. Cardoso, Ana Rute, 2007. "Jobs for young university graduates," Economics Letters, Elsevier, Elsevier, vol. 94(2), pages 271-277, February.
  5. Gilles Duranton & Vassilis Monastiriotis, 2002. "Mind the Gaps: The Evolution of Regional Earnings Inequalities in the U.K., 1982-1997," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 42(2), pages 219-256.
  6. repec:att:wimass:8904 is not listed on IDEAS
  7. Centeno, Mario & Novo, Alvaro A., 2009. "When Supply Meets Demand: Wage Inequality in Portugal," IZA Discussion Papers 4592, Institute for the Study of Labor (IZA).
  8. Martins, Pedro S. & Pereira, Pedro T., 2004. "Does education reduce wage inequality? Quantile regression evidence from 16 countries," Labour Economics, Elsevier, Elsevier, vol. 11(3), pages 355-371, June.
  9. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
  10. Richard E. Caves, 1998. "Industrial Organization and New Findings on the Turnover and Mobility of Firms," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 1947-1982, December.
  11. Pedro Portugal & Olivier Blanchard, 2001. "What Hides Behind an Unemployment Rate: Comparing Portuguese and U.S. Labor Markets," American Economic Review, American Economic Association, American Economic Association, vol. 91(1), pages 187-207, March.
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