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  5. Inequality Within and Across Firms
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Inequality Within and Across Firms

Paper Session

Saturday, Jan. 4, 2025 8:00 AM - 10:00 AM (PST)

Hilton San Francisco Union Square, Union Square 13
Hosted By: American Economic Association
  • Chair: Sydnee Caldwell, University of California-Berkeley

Quantifying Racial Disparities Using Consecutive Employment Spells

Isaac Sorkin
,
Stanford

Abstract

This paper develops a framework to quantify racial disparities in earnings and employment that are not plausibly due to differences in productivity. Employers learn about worker productivity over time, and so we can use implications of this behavior to match high-tenure Black and white workers on unobservables in their current jobs. Gaps in earnings and separations between these high-tenure matched pairs in their next jobs are then not plausibly due to differences in productivity. Using U.S. matched employer-employee data, earnings differences among these matched workers are about five log points, about a third of the racial earnings gap among high-tenure workers. Similarly, in their next job, matched Black workers are about a third of a percentage point more likely to separate each quarter. The welfare costs of these separation differences are over half of a percent of lifetime consumption.

Cultural Transmission within a Multinational

Virginia Minni
,
University of Chicago
Kieu-Trang Nguyen
,
Kellogg School of Management
Heather Sarsons
,
University of British Columbia

Abstract

We use data from a large multinational to test whether gender norms are transmitted from one office to another within the firm. We find that managers from countries with more progressive gender norms have a lasting impact on workplace culture when they move to offices in countries with less progressive norms. Using quasi-random variation in manager moves, we find that the gender pay gap in less progressive offices closes when a male manager moves from an office with more progressive norms. This is in part due to the managers reassigning women to higher skill jobs that pay more. The effects persist after the incoming manager rotates out as women in those offices have by that time entered into managerial roles themselves.

Voluntary Minimum Wages

Ellora Derenoncourt
,
Princeton
David Weil
,
Brandeis University

Abstract

Recent wage growth at the bottom of the earnings distribution in the U.S. has reversed a decades-long trend of widening wage inequality. Numerous state and local minimum wage increases have overtaken an increasingly non-binding federal minimum wage, and robust labor demand in the post-pandemic recovery drove substantial wage growth in the low-wage sector. An increasingly pervasive phenomenon during this period is the use of voluntary, company-wide minimum wages by private employers, including some of the largest retailers in the U.S. We use administrative payroll data to study the effects of large retailer voluntary minimum wages since 2014 on their own wages and employment as well as spillover effects on other employers. Voluntary minimum wages result in sizable wage increases and reductions in turnover at the companies that implemented them. Despite the decline in separations from companies with voluntary minimums, overall hiring rates at other companies do not decline, and wages at other companies do not increase. Thus, while voluntary minimum wages have affected over 3 million jobs among the largest retailers with policies, their impact on the broader market is limited.

Wages and Rents: A Worker's View

Sydnee Caldwell
,
University of California-Berkeley
Ingrid Haegele
,
Loyola Marymount University
Joerg Heining
,
IAB

Abstract

Abstract This paper uses linked survey-administrative data to examine whether workers expect wages and non-wage values to differ across firms, whether workers use this knowledge to direct their search, and whether firm employees have higher valuations of firm non-wage values than outside workers. We first document that many workers knew wages at the time they applied to their current firm, that workers expect firms to differ in wage premia, and that workers' firm-specific expectations and firm-specific premia are correlated with administrative data predictions. We then present several distinct pieces of evidence which suggest workers direct their search on the basis of pay. In the final part of our analysis, we use firm-specific hypothetical choice experiments to confirm that workers expect firms to vary in rents. We then document that firm insiders (employees) and outsiders differ in their valuations and that, among firm insiders, valuations differ by tenure. The results are consistent with sorting and with the emergence of ex post firm rents.
JEL Classifications
  • J0 - General