What drives Income Inequality at the Firm - Level? Literature Review based on Recent Trends in Germany and the U.S.

Inhaltsverzeichnis (Table of Contents)

• 1 Introduction: Conceptualizing Inequality Research
• 2 Data and Conceptual Overview
  • 2.1 Summary of Main Points
    • 2.1.1 Card, Heining and Kline - Basic Findings
    • 2.1.2 Song, Price, Guvenen, Bloom and von Wachter - Basic Findings
  • 2.2 Data and Concepts
    • 2.2.1 Time Frame
    • 2.2.2 Data Source
    • 2.2.3 Earnings Measure
    • 2.2.4 Firm Measure
    • 2.2.5 Summary of Data and Concepts
    • 2.2.6 Potential Issues
• 3 Income, Income Inequality and its Drivers
  • 3.1 Descriptive Statistics on Earnings Inequality
    • 3.1.1 Development of overall Earnings Inequality in Germany by CHK
    • 3.1.2 Development of Overall Earnings Inequality in the U.S. by SPG
  • 3.2 Main Analysis: What factors drive Earnings Inequality?
    • 3.2.1 OLS Estimation of Earnings Function
    • 3.2.2 Decomposition of Variance
    • 3.2.3 Results of these Decompositions in both Articles
  • 3.3 What drives Income Inequality at the Firm-Level?
    • 3.3.1 Components of Interest
    • 3.3.2 Theoretical Mechanism
    • 3.3.3 Five Potential Factors driving Inequality at the Firm-Level
• 4 Conclusion: The Influences at the Firm-Level

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This thesis aims to investigate the driving forces behind income inequality at the firm-level, focusing on the development of market earnings inequality between firms in Germany and the U.S. It examines the contributions of two recent studies by Card et al. (2013b) and Song et al. (2016) to understand the factors that influence income inequality within establishments and corporate units. The thesis seeks to answer the question: What influences the development of market earnings inequality between firms, understood as establishments and as distinct corporate units?

• Exploring the impact of firm-level factors on income inequality.
• Analyzing the methodologies and findings of two key studies on earnings inequality.
• Comparing the development of income inequality in Germany and the U.S.
• Examining the role of specific components in explaining income inequality.
• Developing a theoretical framework for understanding the mechanisms driving firm-level inequality.

Zusammenfassung der Kapitel (Chapter Summaries)

Chapter 2 provides a detailed overview of the research methodologies and datasets employed in the two selected studies by Card et al. (2013b) and Song et al. (2016), offering a comprehensive understanding of the concepts and limitations of their findings. This chapter highlights the key variables and data sources utilized, shedding light on the potential influences on the studies’ main results.

Chapter 3 delves into the analysis of earnings inequality in Germany and the U.S., employing descriptive statistics to illustrate the development of inequality across different time periods. This chapter examines the empirical models utilized in the two studies, including the estimation of earnings functions and the decomposition of variance. It explores the impact of various components identified by the studies, shedding light on their contributions to overall earnings inequality.

Schlüsselwörter (Keywords)

This thesis centers on the key concepts of income inequality, firm-level analysis, earnings inequality, establishment, corporate unit, and decomposition of variance. It explores the influence of factors such as human capital, technology, institutions, and demographics on income inequality at the firm-level. The research draws upon studies focusing on the development of earnings inequality in Germany and the U.S., utilizing data from administrative sources and representative surveys.