David Price

First name
David
Last name
Price
Abstract

We use a massive, matched employer-employee database for the United States to analyze the contribution of firms to the rise in earnings inequality from 1978 to 2013. We find that one-third of the rise in the variance of (log) earnings occurred within firms, whereas two-thirds of the rise occurred between firms. However, this rising between-firm variance is not accounted for by the firms themselves: the firm-related rise in the variance can be decomposed into two roughly equally important forces -- a rise in the sorting of high-wage workers to high-wage firms and a rise in the segregation of similar workers between firms. In contrast, we do not find a rise in the variance of firm-specific pay once we control for worker composition. Instead, we see a substantial rise in dispersion of person-specific pay, accounting for 68% of rising inequality, potentially due to rising returns to skill. The rise in between-firm variance, mostly due to worker sorting and segregation, accounted for a particularly large share of the total increase in inequality in smaller and medium firms (explaining 84% for firms with fewer than 10,000 employees). In contrast, in the very largest firms with 10,000+ employees, 42% of the increase in the variance of earnings took place within firms, 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 firms to the
overall increase in within-firm earnings inequality is small.

Year of Publication
2018
Number
618
Date Published
04/2018
Publication Language
eng
Citation Key
10501
Von Wachter, T., Song, J., Price, D., Guvenen, F., & Bloom, N. (2018). Firming Up Inequality. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01p2676z23z (Original work published 04/2018AD)
Working Papers
Abstract

We investigate the long-term effects of cash assistance for beneficiaries and their children by following up with participants in the Seattle-Denver Income Maintenance Experiment. Treated families in this randomized experiment received thousands of dollars annually in extra government benefits for three or five years in the 1970s. We match experimental records to Social Security Administration data using a novel algorithm and find that treatment decreased adults’ post-experimental annual earnings by $1,800 and increased disability benefit applications by 6.3 percentage points, possibly driven by occupational changes. In contrast, children in treated families experienced no significant effects on any main variable studied.

Year of Publication
2018
Number
621
Date Published
06/2018
Publication Language
eng
Citation Key
10626
Song, J., & Price, D. (2018). The Long-Term Effects of Cash Assistance. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01ng451m210 (Original work published 06/2018AD)
Working Papers