AEA Home
AEA

Document Request

You have requested the following article:
Sources of Wage Inequality
Anders Akerman, Elhanan Helpman, Oleg Itskhoki, Marc-Andreas Muendler, Stephen Redding
American Economic Review. May 2013, Vol. 103, No. 3: Pages 214-219

Sources of Wage Inequality

Anders Akerman, 1

1Stockholm University, Department of Economics, Stockholm, SE-106 91, Sweden.

Elhanan Helpman, 2

2Harvard University, Department of Economics, 1805 Cambridge Street, Cambridge, MA 02138 and CIFAR.

Oleg Itskhoki, 3

3Princeton University, Department of Economics, Princeton, NJ 08544 and WWS.

Marc-Andreas Muendler, 4

4UC San Diego, Department of Economics, 9500 Gilman Dr. MC 0508, La Jolla, CA 92093.

Stephen Redding5

5Princeton University, Department of Economics, Princeton, NJ 08544 and WWS.

Abstract

Recent theories of firm heterogeneity emphasize between-firm wage differences as a new mechanism through which trade can affect wage inequality. Using linked employer-employee data for Sweden, we show that many of the stylized facts about wage inequality found in Helpman et al. (2012) for Brazil also hold for Sweden. Much of overall wage inequality arises within sector-occupations and for workers with similar observable characteristics. One notable difference is a smaller contribution from between-firm differences in wages in Sweden, which could reflect the influence of Swedish labor market institutions in dampening the scope for variation in wages between firms through collective wage agreements.