The Evolution Of Inequality In Productivity And Wages: Panel Data Evidence

There has been a remarkable increase in wage inequality in the US, UK and many other countries over the past three decades. A significant part of this appears to be within observable groups (such as age-gender-skill cells). A generally untested implication of many theories rationalizing the growth of within-group inequality is that firm-level productivity dispersion should also have increased. The relevant data for the US is problematic, so the authors utilize a UK panel dataset covering the manufacturing and non-manufacturing sectors since the early 1980s. They find evidence that productivity inequality has increased.