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Keywords:wage inequality OR Wage inequality OR Wage Inequality 

Working Paper
Organizations, Skills, and Wage Inequality

We extend an on-the-job search framework in order to allow firms to hire workers with different skills and skills to interact with firms? total factor productivity (TFP). Our model implies that more productive firms are larger, pay higher wages, and hire more workers at all skill levels and proportionately more at higher skill types, matching key stylized facts. We calibrate the model using five educational attainment levels as proxies for skills and estimate nonparametrically firm-skill output from the wage distributions for different educational levels. We consider two periods in time (1985 ...
Working Papers (Old Series) , Paper 1706

Speech
Remarks at the Economic Press Briefing on the Regional Economy, Federal Reserve Bank of New York, New York City

Remarks at the Economic Press Briefing on the Regional Economy, Federal Reserve Bank of New York, New York City.
Speech , Paper 252

Working Paper
Firms, Skills, and Wage Inequality

We present a model with search frictions and heterogeneous agents that allows us to decompose the overall increase in US wage inequality in the last 30 years into its within- and between-firm and skill components. We calibrate the model to evaluate how much of the overall rise in wage inequality and its components is explained by different channels. Output distribution per firm-skill pair more than accounts for the observed increase over this period. Parametric identification implies that the worker-specific component is responsible for 85 percent of this, compared to 15 percent that is ...
Working Papers , Paper 17-06R

Working Paper
Are Manufacturing Jobs Still Good Jobs? An Exploration of the Manufacturing Wage Premium

This paper explores the factors behind the disappearance of the manufacturing wage premium—the additional pay a manufacturing worker earns relative to a comparable nonmanufacturing worker. With substantially larger declines across union members, we quantify the role of unionization by exploiting the heterogeneity in membership status across manufacturing industries. We find that the decline in union membership explains more than 70 percent of the decline in the wage premium since the 1990s for union members but does not affect nonunion premia. Our findings suggest that the erosion of ...
Finance and Economics Discussion Series , Paper 2022-011r1

Working Paper
Oligopsonies over the Business Cycle

With a duopsony model, we show how the degree of labor market slack relates to earnings inequality and firm size distribution across local labor markets and the business cycle. In booms, due to the high aggregate productivity, there is fierce competition with resulting high wages and full employment. During recessions, there is labor market slack and firms enjoy local market power. In periods in which the economy is moving in or out of a recession, there is an “accommodation” phase, with firms shrinking their labor forces and paying lower wages instead of competing for poached workers. We ...
Working Papers , Paper 20-06

Lower-Wage Workers in Ohio Have Seen Strong Wage Gains Since 2019

In Ohio, the trend of relatively weak wage growth for lower-wage workers has reversed recently. This has resulted in the lowest wage inequality in more than two decades, with lower-wage workers seeing notably stronger real wage gains during 2019 to 2023 than for others throughout the wage distribution.
Cleveland Fed District Data Brief

Working Paper
Which Ladder to Climb? Wages of Workers by Job, Plant, and Education

Wages grow but also become more unequal as workers age. Using German administrative data, we largely attribute both life-cycle facts to one driving force: some workers progress in hierarchy to jobs with more responsibility, complexity, and independence. In short, they climb the career ladder. Climbing the career ladder explains 50% of wage growth and virtually all of rising wage dispersion. The increasing gender wage gap by age parallels a rising hierarchy gap. Our findings suggest that wage dynamics are shaped by the organization of production, which itself likely depends on technology, the ...
Opportunity and Inclusive Growth Institute Working Papers , Paper 15

Working Paper
Wage Inequality and the Rise in Labor Force Exit: The Case of US Prime-Age Men

This article offers the first empirical evidence that labor force exit rates rise when workers’ relative earnings fall. The model takes into account that a job not only provides economic security but also affirms a worker’s social status, which is tied to their relative position in the labor market. Based on the results, the decline in relative earnings for non-college prime-age men over the last four decades is estimated to have raised their labor force exit propensity by 0.49 percentage point, accounting for 44 percent of the total growth in their labor force exit rate during this ...
Working Papers , Paper 22-16

Working Paper
Did Racially Motivated Labor Policy Reverse Equality Gains for Everyone?

Labor protection policies in the 1950s and 1960s helped many low- and middle-wage white workers in the United States achieve the American Dream. This coincided with historically low levels of inequality across income deciles. After the Civil Rights Act of 1964, policies that had previously helped build the white middle class reversed, especially in states with a larger Black population. Calibrating a labor search model to match minimum wages, unemployment benefits, and bargaining power before and after the Civil Rights Act, I find declining labor protections explain half of the rise in 90/10 ...
Opportunity and Inclusive Growth Institute Working Papers , Paper 090

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