Institute for Employment Research (IAB)
NBER Working Papers and Publications
|November 2016||Firms and Labor Market Inequality: Evidence and Some Theory|
with David Card, Ana Rute Cardoso, Patrick Kline: w22850
We survey two growing bodies of research on firm-level drivers of labor market inequality. The first examines how wages are affected by differences in employer productivity. Studies that focus on firm-specific productivity shocks and control for the non-random sorting of workers to firms typically find that a 10% increase in value-added per worker leads to somewhere between a 0.5% and 1.5% increase in wages. Given the wide variation in firm-specific productivity, elasticities of this size suggest that a significant fraction of wage inequality is tied to firm performance. A second literature estimates two-way fixed effects models that rely on the wage changes of people who move between firms to identify firm-specific wage premiums. This literature also concludes that firm pay setting is imp...
|November 2015||Firms and Labor Market Inequality: A Review|
with David Card, Patrick Kline, Ana Rute Cardoso
in Firms and the Distribution of Income: The Roles of Productivity and Luck, Edward Lazear and Kathryn Shaw, organizers
|November 2012||Workplace Heterogeneity and the Rise of West German Wage Inequality|
with David Card, Patrick Kline: w18522
We study the role of establishment-specific wage premiums in generating recent increases in West German wage inequality. Models with additive fixed effects for workers and establishments are fit in four distinct time intervals spanning the period 1985-2009. Unlike standard wage models, specifications with both worker and plant-level heterogeneity components can explain the vast majority of the rise in wage inequality. Our estimates suggest that the increasing variability of West German wages results from a combination of rising heterogeneity between workers, rising variability in the wage premiums at different establishments, and increasing assortativeness in the matching of workers to plants. We use the models to decompose changes in wage gaps between different education levels, occupatio...
Published: David Card & JÃ¶rg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 967-1015. citation courtesy of