Rising between-workplace inequalities in high-income countries

Are Skeie Hermansen is co-author of an article in the Proceedings of the National Academy of Sciences of the United States of America on the results of a large international study on rising inequality.

Cover of the Proceedings of the National Academy of Sciences of the United States of America

Abstract

It is well documented that earnings inequalities have risen in many high-income countries. Less clear are the linkages between rising income inequality and workplace dynamics, how within- and between-workplace inequality varies across countries, and to what extent these inequalities are moderated by national labor market institutions. In order to describe changes in the initial between- and within-firm market income distribution we analyze administrative records for 2,000,000,000+ job years nested within 50,000,000+ workplace years for 14 high-income countries in North America, Scandinavia, Continental and Eastern Europe, the Middle East, and East Asia. We find that countries vary a great deal in their levels and trends in earnings inequality but that the between-workplace share of wage inequality is growing in almost all countries examined and is in no country declining. We also find that earnings inequalities and the share of between-workplace inequalities are lower and grew less strongly in countries with stronger institutional employment protections and rose faster when these labor market protections weakened. Our findings suggest that firm-level restructuring and increasing wage inequalities between workplaces are more central contributors to rising income inequality than previously recognized.

Read the article in the Proceedings of the National Academy of Sciences of the United States of America.

Published Apr. 15, 2020 10:58 AM - Last modified Apr. 15, 2020 10:58 AM