Working Paper: NBER ID: w26786
Authors: John C. 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.
Keywords: Earnings Inequality; Industry Effects; Occupation Effects
JEL Codes: E24; J24; J31; L22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| rising interindustry earnings differentials (J31) | increase in between-firm earnings inequality (L19) |
| occupation effects (F69) | rising interindustry earnings differentials (J31) |
| changes in occupation mix across industries (J21) | occupation effects (F69) |
| changes in occupation mix differentials (J69) | occupation effects (F69) |
| rising inequality across detailed industries (D31) | increase in between-firm earnings inequality (L19) |
| occupation effects (F69) | increase in between-firm earnings inequality (L19) |