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The Slow Diffusion of Earnings Inequality

Author

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  • Isaac Sorkin
  • Melanie Wallskog

Abstract

Rising between-firm pay dispersion accounts for the majority of the dramatic increase in earnings inequality in the United States in the last several decades. This paper shows that a distinct cross-cohort pattern drives this rise: newer cohorts of firms enter more dispersed and stay more dispersed throughout their lives. These cohort patterns suggest a link between changes in firm entry associated with the decline in business dynamism and the rise in earnings inequality. Cohort effects also imply a slow diffusion of inequality: inequality rises as younger and more unequal cohorts of firms replace older and more equal cohorts.

Suggested Citation

  • Isaac Sorkin & Melanie Wallskog, 2023. "The Slow Diffusion of Earnings Inequality," Journal of Labor Economics, University of Chicago Press, vol. 41(S1), pages 95-127.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/726635
    DOI: 10.1086/726635
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    Cited by:

    1. Arellano-Bover, Jaime & San, Shmuel, 2023. "The Role of Firms and Job Mobility in the Assimilation of Immigrants: Former Soviet Union Jews in Israel 1990–2019," IZA Discussion Papers 16389, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

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

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