Workplace Earnings Polarization: A Four-Country Panel Analysis

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There has been a rapid rise in earnings inequalities across workplaces in the U.S. and in other countries. Shifts in firm market power, global competition and firm structure are implicated in these changes. To cut costs, some dominant brand manufacturers have been spinning off supplier functions to lower wage firms. Branded companies may also subcontract out most low skill labor while absorbing the profits associated with the brand. Other mechanisms include franchisors leasing their brand to revenue constrained franchisees and global commodity chains in which large retailers or manufacturers in high income countries delegate routine production to low wage locales. This package of dynamic shifts in the power, productivity, boundaries, and global scope of dominant firms appears to have been encouraged in some countries by national employment policy models and the rise of a shareholder performance model. This project will both generate and test organizational level explanations for rising within and between firm earnings inequalities. Project findings will have implications for national labor market policy development in the U.S. and abroad.The project includes interdisciplinary collaborators and data on four countries sampled because they have different levels of exposure to the global economy and different patterns of contemporary shifts in institutional employment protections. In each of these countries the project will access multiple years of linked employer-employee administrative data collected directly from employers by each nation's government. Sample sizes range from a low of 20,000 workplaces and 1,500,000 employees in one country to comparable data on the entire economies in other countries. Using thirty-year country-specific panels of workplaces, the project will model national and workplace level dynamics in both between and within workplace earnings inequalities as a function of industrial restructuring, changes in the organization of production, as well as the pressures of shifting institutions and global competition. Multivariate error correction panel models will be used to estimate causal effects. The project will contribute to the sociological theories and literatures on organizational restructuring, skill based technological change, organizational inequality and comparative political economy.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.