Journal of Labor Economics Vol. 41 No. S1 2023
The Slow Diffusion of Earnings Inequality
Abstract
Rising between-firm pay dispersion accounts for the majority of the dramatic increase in earnings inequality in the United States in the last several decades. This paper shows that a distinct cross-cohort pattern drives this rise: newer cohorts of firms enter more dispersed and stay more dispersed throughout their lives. These cohort patterns suggest a link between changes in firm entry associated with the decline in business dynamism and the rise in earnings inequality. Cohort effects also imply a slow diffusion of inequality: inequality rises as younger and more unequal cohorts of firms replace older and more equal cohorts.
- DOI
- 10.1086/726635
- Volume
- 41
- Issue
- S1
- Pages
- S95-S127
- Language
- en
- Sources
- openalex crossref