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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. Cindy Cunningham & Lucia Foster & Cheryl Grim & John Haltiwanger & Sabrina Wulff Pabilonia & Jay Stewart & Zoltan Wolf, 2023. "Dispersion in Dispersion: Measuring Establishment‐Level Differences in Productivity," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 69(4), pages 999-1032, December.
    3. John C. Haltiwanger & Henry R. Hyatt & James Spletzer, 2022. "Industries, Mega Firms, and Increasing Inequality," NBER Working Papers 29920, National Bureau of Economic Research, Inc.
    4. 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.
    5. Manuel Macera & Hitoshi Tsujiyama, 2024. "Inequality and technological change," Quantitative Economics, Econometric Society, vol. 15(2), pages 427-451, May.
    6. Lukas B. Freund, 2025. "Superstar Teams," CESifo Working Paper Series 12303, CESifo.
    7. Leila Gautham & Nancy Folbre & Kristin Smith, 2024. "Earnings inequality and the expansion of care services in the United States, 1985–2019," Industrial Relations Journal, Wiley Blackwell, vol. 55(2), pages 119-140, March.
    8. Freund, L. B., 2022. "Superstar Teams," Cambridge Working Papers in Economics 2276, Faculty of Economics, University of Cambridge.
    9. repec:cam:camjip:2235 is not listed on IDEAS
    10. 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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