The Evolution of Inequality in Productivity and Wages: Panel Data Evidence / Giulia Faggio, Kjell Salvanes, John Van Reenen.

Format:

Book

Author/Creator:

Faggio, Giulia.

Contributor:

National Bureau of Economic Research.

Salvanes, Kjell.

Van Reenen, John.

Series:

Working Paper Series (National Bureau of Economic Research) no. w13351.

NBER working paper series no. w13351

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Evolution of Inequality in Productivity and Wages

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2007.

Summary:

There has been a remarkable increase in wage inequality in the US, UK and many other countries over the past three decades. A significant part of this appears to be within observable groups (such as age-gender-skill cells). A generally untested implication of many theories rationalizing the growth of within-group inequality is that firm-level productivity dispersion should also have increased. The relevant data for the US is problematic, so we utilize a UK panel dataset covering the manufacturing and non-manufacturing sectors since the early 1980s. We find evidence that productivity inequality has increased. Existing studies have underestimated this increased dispersion because they use data from the manufacturing sector which has been in rapid decline. Most of the increase in individual wage inequality has occurred because of an increase in inequality between firms (and within industries). Increased productivity dispersion appears to be linked with new technologies as suggested by models such as Caselli (1999) and is not primarily due to an increase in transitory shocks, greater sorting or entry/exit dynamics.

Notes:

Print version record

August 2007.