wage inequality, productivity, wages

The Contribution of Dispersion across Plants to the Increase in US Earnings Dispersion

Using an extensive set of establishment and individual data, we estimate the extent to which the variance of earnings among establishments increased in 1977-2002 and its contribution to the increased dispersion of US earnings among individuals. We find that more than 70 percent of the increase in the variance of earnings in this period occurred across establishments. More than two thirds of the growth in establishment wage dispersion arises from changes within detailed industry and region. Two industries contributed disproportionately to earnings inequality.