Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation
39 Pages Posted: 9 Oct 2010
There are 3 versions of this paper
Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation
Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation
Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation
Date Written: September 1, 2010
Abstract
This paper uses matched employer-employee data from the U.S. Census Bureau to investigate the contribution of worker and firm reallocation to changes in wage inequality within and across industries between 1992 and 2003. We find that the entry and exit of firms and the sorting of workers and firms based on underlying worker skills are important sources of changes in earnings distributions over time. Our results suggest that the underlying dynamics driving changes in earnings inequality are complex and are due to factors that cannot be measured in standard cross-sectional data.
Keywords: Inequality, Decomposition, Human Capital, Reallocation
JEL Classification: C23, J24, J31, J48, J63
Suggested Citation: Suggested Citation
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