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Matching, Reallocation and Changes in Earnings Dispersion

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  • Simon Burgess
  • Julia Lane
  • Kevin McKinney

Abstract

The ‘fractal’ nature of the rise in earnings dispersion is one of its key features. In this paper, we offer a new perspective on the causes of changes in earnings dispersion, focusing on the role of labour reallocation. We set out a framework showing that job and worker reallocation affects earnings dispersion. We quantify this using a data set comprising almost the universe of workers and employers in Maryland. The changing allocation of workers to jobs played a significant role in explaining movements in the dispersion of earnings.

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  • Simon Burgess & Julia Lane & Kevin McKinney, 2009. "Matching, Reallocation and Changes in Earnings Dispersion," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 91-110, February.
    • Handle: RePEc:bla:obuest:v:71:y:2009:i:1:p:91-110
    DOI: 10.1111/j.1468-0084.2008.00519.x
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    1. Gavilan, Angel, 2012. "Wage inequality, segregation by skill and the price of capital in an assignment model," European Economic Review, Elsevier, vol. 56(1), pages 116-137.
    2. Cabrales, Antonio & Calvó-Armengol, Antoni, 2008. "Interdependent preferences and segregating equilibria," Journal of Economic Theory, Elsevier, vol. 139(1), pages 99-113, March.
    3. Antonio Cabrales, 2010. "The causes and economic consequences of envy," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 1(4), pages 371-386, September.

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