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

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  • Erling Barth
  • Alex Bryson
  • James C. Davis
  • Richard Freeman

Abstract

This paper analyzes the role of establishments in the upward trend in dispersion of earnings that has become a central topic in economic analysis and policy debate. It decomposes changes in the variance of log earnings among individuals into the part due to changes in earnings among establishments and the part due to changes in earnings within establishments. The main finding is that much of the 1970s-2010s increase in earnings inequality results from increased dispersion of the earnings among the establishments where individuals work. Our results direct attention to the role of establishment-level pay setting and economic adjustments in earnings inequality.

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  • Erling Barth & Alex Bryson & James C. Davis & Richard Freeman, 2016. "It's Where You Work: Increases in the Dispersion of Earnings across Establishments and Individuals in the United States," Journal of Labor Economics, University of Chicago Press, vol. 34(S2), pages 67-97.
  • Handle: RePEc:ucp:jlabec:doi:10.1086/684045
    DOI: 10.1086/684045
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