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One-third of the rise in the variance of log earnings occurs within firms, while two-thirds occurs between firms. Between-firm variance growth reflects increased sorting of high-wage workers into high-wage firms and stronger segregation of similar workers across firms. Controlling for worker composition shows no rise in firm-specific pay variance, but person-specific pay dispersion rises substantially, accounting for 68% of rising inequality. The study finds between-firm variance drives most total inequality gains in smaller and medium firms and a more mixed pattern in the largest firms.",{"@graph":63,"@context":118},[64,80,101],{"@type":65,"itemListElement":66},"BreadcrumbList",[67,71,74,77],{"item":68,"name":69,"@type":70,"position":9},"https://docshare.wps.com","Home","ListItem",{"item":72,"name":10,"@type":70,"position":73},"https://docshare.wps.com/template/",2,{"item":75,"name":11,"@type":70,"position":76},"https://docshare.wps.com/template/presentations/",3,{"item":78,"name":59,"@type":70,"position":79},"https://docshare.wps.com/template/firming-up-inequality-working-paper-750-april-2018/301537/",4,{"url":78,"name":59,"@type":81,"image":82,"author":87,"headline":59,"publisher":90,"fileFormat":93,"inLanguage":57,"description":61,"dateModified":94,"datePublished":95,"encodingFormat":93,"isAccessibleForFree":96,"interactionStatistic":97},"DigitalDocument",{"url":83,"@type":84,"width":85,"height":86},"https://docshare.wps.com/thumbnails/firming-up-inequality-working-paper-750-april-2018/301537.png","ImageObject",442,249,{"name":88,"@type":89},"Lucas Vance","Person",{"url":68,"name":91,"@type":92},"DocShare","Organization","application/pdf","2026-09-23","2026-09-19",true,{"@type":98,"interactionType":99,"userInteractionCount":79},"InteractionCounter",{"@type":100},"ViewAction",{"@type":102,"mainEntity":103},"FAQPage",[104,110,114],{"name":105,"@type":106,"acceptedAnswer":107},"What time period and data source does the paper use to study earnings inequality?","Question",{"text":108,"@type":109},"The paper analyzes the United States from 1978 to 2013 using a massive, matched employer-employee database.","Answer",{"name":111,"@type":106,"acceptedAnswer":112},"How much of the rise in earnings inequality comes from within-firm versus between-firm changes?",{"text":113,"@type":109},"About one-third of the rise in the variance of log earnings occurs within firms, while about two-thirds occurs between firms.",{"name":115,"@type":106,"acceptedAnswer":116},"What explains the growth in between-firm variance?",{"text":117,"@type":109},"It is driven by increased sorting of high-wage workers into high-wage firms and increased segregation of similar workers across firms.","https://schema.org",{"og:url":78,"og:type":120,"og:title":59,"og:site_name":91,"og:description":61},"article",{"robots":122,"canonical":78},"index,follow",{"doc_id":124,"site_id":56},301537,1790141956,{"code":4,"msg":5,"data":127},{"doc_id":124,"user_id":128,"nickname":88,"user_avatar":129,"doc_module":9,"category_id":8,"category_name":11,"doc_title":59,"doc_description":61,"doc_content":130,"file_id":131,"file_url":132,"file_type":133,"file_size":134,"view_count":79,"is_deleted":4,"is_public":9,"is_downloadable":9,"audit_status":9,"page_count":135,"language":136,"language_code":57,"site_id":56,"html_lang":57,"table_of_contents":137,"faqs":138,"seo_title":139,"seo_description":61,"update_tm":140,"read_time":141},549768064622,"https://ap-avatar.wpscdn.com/davatar_6f874abed73319feea01a86fa6f0fab8","Firming Up Inequality  \nJae Song  \nSocial Security Administration  \nDavid J. Price  \nPrinceton University  \nFatih Guvenen  \nUniversity of Minnesota,  \nFederal Reserve Bank of Minneapolis, and NBER  \nNicholas Bloom  \nStanford University, NBER, and SIEPR  \nTill von Wachter  \nUCLA and NBER  \nWorking Paper 750  \nApril 2018  \nDOI: [https://doi.org/10.21034/wp.750](https://doi.org/10.21034/wp.750)  \nKeywords: Income inequality; Pay inequality; Between-firm inequality  \nJEL classification: E23, J21, J31  \nThe views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.  \nFederal Reserve Bank of Minneapolis • 90 Hennepin Avenue • Minneapolis, MN 55480-0291  \n[https://www.minneapolisfed.org/research/](https://www.minneapolisfed.org/research/)  \nFirming Up Inequality 􀀃  \nJae Songy  \nDavid J. Pricez  \nFatih Guvenenx  \nNicholas Bloom{  \nTill von Wachter k  \nAbstract  \nWe use a massive, matched employer-employee database for the United States to analyze the contribution of 􀀌rms to the rise in earnings inequality from 1978 to 2013 . We 􀀌nd that one-third of the rise in the variance of (log) earnings occurred within 􀀌rms, whereas two-thirds of the rise occurred between 􀀌rms. However, this rising between-􀀌rm variance is not accounted for by the 􀀌rms themselves: the 􀀌rm-related rise in the variance can bedecomposed into two roughly equally important forces|a rise in the sorting of high-wage workers to high-wage 􀀌rms and a rise in the segregation of similar workers between 􀀌rms. In contrast, we do not 􀀌nd a rise in the variance of 􀀌rm-speci􀀌c pay once we control for worker composition. Instead, we see a substantial rise in dispersion of person-speci􀀌c pay, accounting for 68% of rising inequality, potentially due to rising returns to skill. The rise in between-􀀌rm variance, mostly due to worker sorting and segregation, accounted for a particularly large share of the total increase in inequality in smaller and medium 􀀌rms (explaining 84% for 􀀌rms with fewer than 10,000 employees) . In contrast, in the very largest 􀀌rms with 10,000+ employees, 42% of the increase in the variance of earnings took place within 􀀌rms, driven by both declines in earnings for employees below the median and a substantial rise in earnings for the 10% best-paid employees. However, because of their small number, the contribution of the very top 50 or so earners at large 􀀌rms to the overall increase in within-􀀌rm earnings inequality is small.  \nKeywords: Income inequality, pay inequality, between-􀀌rm inequality.  \nJEL Codes: E23, J21, J31  \n􀀃 Version: April, 2018 . Special thanks to Gerald Ray and Pat Jonas at the Social Security Administration for their help and support. We thank our formal discussants Pat Kline, Lin Peng, Ben Pugsley, Johannes Schmieder, Andre Shleifer, Larry Katz and 􀀌ve anonymous referees and seminar participants at the AEA, ASU, Berkeley, the White House CEA, Columbia, Chicago, Dartmouth, Drexel, FRBs of Atlanta, New York, and Philadelphia, Harvard, Michigan, MIT, NBER, Northwestern, Princeton, Rand, Stanford, TNIT, UCLA, and Yale for helpful comments. Benjamin Smith and Brian Lucking provided superb research assistance. We are grateful to the National Science Foundation for generous funding. To combat alphabetical inequality, author names have been randomly ordered.  \ny Social Security Administration, [jae.song@ssa.gov](jae.song@ssa.gov)[ ](jae.song@ssa.gov)zPrinceton University; [djprice@princeton.edu](djprice@princeton.edu)  \nx University of Minnesota, FRB of Minneapolis, and NBER; [guvenen@umn.edu](guvenen@umn.edu)[ ](guvenen@umn.edu){ Stanford University, NBER, and SIEPR; [nbloom@stanford.edu](nbloom@stanford.edu)  \nk UCLA and NBER; [tvwachter@econ.ucla.edu](tvwachter@econ.ucla.edu)  \n1 Introduction  \nThe dramatic rise in U.S. earnings inequality from the 1970s to today has been well documented (see Katz and Autor (1999) and Acemoglu and Autor (2011) for detailed","cbCaiemVobWEH82G","https://ap.wps.com/l/cbCaiemVobWEH82G","pdf",1552654,91,"English","# Abstract\n# Introduction\n## Employer role in inequality research","[{\"question\":\"What time period and data source does the paper use to study earnings inequality?\",\"answer\":\"The paper analyzes the United States from 1978 to 2013 using a massive, matched employer-employee database.\"},{\"question\":\"How much of the rise in earnings inequality comes from within-firm versus between-firm changes?\",\"answer\":\"About one-third of the rise in the variance of log earnings occurs within firms, while about two-thirds occurs between firms.\"},{\"question\":\"What explains the growth in between-firm variance?\",\"answer\":\"It is driven by increased sorting of high-wage workers into high-wage firms and increased segregation of similar workers across firms.\"}]","Firming Up Inequality - Working Paper 750 - April 2018 | PDF",1789783375,32]