Between Firm Changes in Earnings Inequality: The Dominant Role of Industry Effects

35 Pages Posted: 2 Mar 2020

See all articles by John Haltiwanger

John Haltiwanger

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

James Spletzer

United States Department of Labor

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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.

Keywords: inequality, industry, occupation

JEL Classification: J3

Suggested Citation

Haltiwanger, John C. and Spletzer, James, Between Firm Changes in Earnings Inequality: The Dominant Role of Industry Effects. IZA Discussion Paper No. 12990, Available at SSRN: https://ssrn.com/abstract=3546388 or http://dx.doi.org/10.2139/ssrn.3546388

John C. Haltiwanger (Contact Author)

University of Maryland - Department of Economics ( email )

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James Spletzer

United States Department of Labor ( email )

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