Earnings Dynamics, Inequality, and Firm Heterogeneity
Bibliographic Data
| ID | 21653296 |
|---|---|
| Authors | Paul Bingley (VIVE Copenhagen Denmark), Lorenzo Cappellari (0000-0001-6791-3494, Università Cattolica Milano Milan Italy, corresponding author) |
| Year | 2026 |
| Volume | 41 |
| Issue | 2 |
| Pages | 169-194 |
| Publication date | 2026-03-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Journal of Applied Econometrics (JOURNAL) |
| Journal identifiers | ISSN: 1099-1255 • E-ISSN: 0883-7252 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1002/jae.70024 |
| OpenAlex | W4417487950 |
| Language | EN |
| References cited | 34 |
Studies of individual earnings dynamics typically overlook firm heterogeneity, while worker and firm decompositions of earnings inequality often neglect the life cycle. We study firm effects in individual earnings dynamics for the Italian private sector population, using the covariance structure of co‐worker earnings for identification. We allow for dynamics of both worker and firm effects, as well as worker‐firm sorting and worker segregation. When workers are young, firm and worker heterogeneity explain similar shares of earnings inequality; however, over the life cycle, workers account for most of the inequality. Sorting is substantial, especially among younger workers. Segregation accounts for most of the earnings inequality between firms
Covariance · Earnings · Earnings response coefficient · Inequality · Neglect · Sorting · Experimental Behavioral Economics Studies · Italy: Economic History and Contemporary Issues · Labor market dynamics and wage inequality
Workplace Heterogeneity and the Rise of West German Wage Inequality
Bargaining, Sorting, and the Gender Wage Gap
Firms and Labor Market Inequality
On the Covariance Structure of Earnings and Hours Changes
Income Variance Dynamics and Heterogeneity
How Much Should We Trust Estimates of Firm Effects and Worker Sorting
What Firms Do
Small-Sample Bias in GMM Estimation of Covariance Structures
Post-Schooling Human Capital Investments and the Life Cycle of Earnings
Firm Wage Differentials and Labor Market Sorting
Income Dynamics and Life-cycle Inequality
| Citation velocity | historical |
|---|---|
| Highly cited | No |