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Jobs, workers and changes in earnings dispersion

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

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Identification Number: 491

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
Subjects: H Social Sciences > HD Industries. Land use. Labor
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 29 Jul 2008 15:52
Last Modified: 01 Oct 2010 09:14
URI: http://eprints.lse.ac.uk/id/eprint/20129

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