NSF-BSF:The Polarization of Employment and Earnings in the United States, 1996-2020

University Of Florida, Gainesville FL

Investigators

Abstract

This project conducts a first-of-its-kind study of the role that workplaces played in accelerating individual income inequality in the United States from 1996 to 2021. Analyses of the research identify the changes in employment, earnings, and fringe benefits that most contributed to the growth of economic inequality in the last thirty years. The findings uncover insights with implications for public, tax, and labor market decisions in the U.S. The research leverages a bespoke set of confidential administrative data sources with linked employer-employee records and implements a novel empirical strategy consisting of hierarchical modeling and decomposition of variance components. In doing so, the research makes four key contributions: First, it theoretically formulates and empirically examines hypotheses laying out the structural changes within organizations, as well as at the occupation and job levels, that can account for the observed trends of rising between workplace earnings inequality. Second, the research shows how structural changes in employment patterns contribute to rising between-workplace inequality. Third, the study updates and expands previous work on fringe benefits and total compensation inequality through 2021. Finally, the study provides the first analysis of how inequalities related to demographic category potentially explain patterns of rising between-workplace inequality through sorting, and how growing between-workplace inequality exacerbate incomes gaps between demographic categories. The research contributes to the literatures on organizational restructuring, skill-biased technological change, organizational inequality, and demographic inequality. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.