Some of the most prominent theories of rising wage inequality emphasize changes in the supply of highly-educated workers, skill-biased technical change, changing labor market institutions, as well as variation in wages across occupations, industries, and geography.
David Card has highlighted some problems and puzzles for some of these prominent theories and has been focusing on the role of firms. His 2011 speech to the Society of Labor Economists highlights some of his thinking on these issues, and his recent paper with Pat Kline and Joerg Heining models and quantifies the importance of firms for rising wage inequality.
Roughly speaking, they show that working for a “good firm” has been quite important for wage growth and that “good workers” are increasingly sorting to good firms. By good firms and workers, they mean firms and workers with large firm and individual fixed effects in wage regressions. In other words…
View original post 349 more words
Utopia, you are standing in it! 
Recent Comments