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In the Land of AKM: Explaining the Dynamics of Wage Inequality in France

Author

Listed:
  • Damien Babet

    (INSEE - Institut national de la statistique et des études économiques (INSEE))

  • Olivier Godechot

    (CRIS - Centre de recherche sur les inégalités sociales (Sciences Po, CNRS) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

  • Marco Guido Palladino

    (Banque de France)

Abstract

We use a newly constructed and quasi-exhaustive matched employer-employee database to study the contribution of firms to wage inequality in France. We implement a simple and tractable correction for the limited mobility bias. Our analysis, covering the period 2002-2019, reveals an increase in between-firm inequality, mainly due to the growing clustering of workers with similar market value. These phenomena are associated with increasing occupational specialization at the firm level. Our results highlight the importance of bias-corrected AKM estimates in capturing the dynamics of wage inequality, and show how both observable job types and unobservable individual characteristics contribute to these patterns.

Suggested Citation

  • Damien Babet & Olivier Godechot & Marco Guido Palladino, 2025. "In the Land of AKM: Explaining the Dynamics of Wage Inequality in France," Sciences Po Economics Publications (main) hal-05543806, HAL.
    • Handle: RePEc:hal:spmain:hal-05543806
    DOI: 10.1086/740187
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-05543806v1
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    2. César Barreto & Antoine Bertheau & Dogan Gulumser & Alexander Hijzen & Astrid Kunze & Marta Lachowska & Anne Sophie Lassen & Salvatore Lattanzio & Benjamin Lochner & Stefano Lombardi & Jordy Meekes & , 2025. "Firms and the Gender Wage Gap: A Comparison of Eleven Countries," Working Paper Series WP 2025-24, Federal Reserve Bank of Chicago.
    3. Gregory Verdugo & Malak Kandoussi, 2025. "Will you follow your job to the suburbs? Commuting, locational amenities and wages in a large metro area," Sciences Po Economics Publications (main) hal-05447239, HAL.
    4. Verdugo, Gregory & Kandoussi, Malak, 2025. "Will you follow your job to the suburbs?," Journal of Urban Economics, Elsevier, vol. 150(C).

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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