Jobs, workers and changes in earnings dispersion

Burgess, Simon, Lane, Julia and Stevens, David (2001) Jobs, workers and changes in earnings dispersion. CEPDP (491). London School of Economics and Political Science. Centre for Economic Performance, London, UK. ISBN 0753014653

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Abstract

The ''fractal'' nature of the rise in earnings dispersion is one of its key features and remains a puzzle. In this paper, we offer a new perspective on the causes of changes in earnings dispersion, focusing on the role of labour reallocation. Once we drop the assumption that all firms pay a given worker the same, the allocation of workers to firms matters for the dispersion of earnings. This perspective highlights two new factors that can affect the dispersion of earnings: rates of job and worker reallocation, and the nature of the process allocating workers to jobs. We set out a framework capturing this idea and quantify the impact of reallocation on earnings dispersion, using a dataset that comprises almost the universe of workers and the universe of employers in Maryland. We show that these factors have potentially large effects in general on earnings dispersion. In the case of Maryland over the period 1985-1994, the changing allocation of workers to jobs played a significant role in explaining movements in the dispersion of earnings.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk
Additional Information:	© 2001 the authors
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HD Industries. Land use. Labor
JEL classification:	J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions
Date Deposited:	29 Jul 2008 15:52
Last Modified:	13 Sep 2024 19:44
URI:	http://eprints.lse.ac.uk/id/eprint/20129

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