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Abstract:

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CentrePiece Article
Inequality of Individual Wages and the Dispersion of Firm Productivity
Giulia Faggio, Kjell Salvanes and John Van Reenen
February 2008
Paper No' CEPCP244:
Full Paper (pdf)

CentrePiece 12 (3) Winter 2008

Many blame globalisation for growing wage inequality in the UK. But according to research by Giulia Faggio, Kjell Salvanes and John Van Reenen, the rise in inequality is better explained by increasing dispersion in the productivity of firms related to their use of new technology.

Their study finds that much of the rise in wage inequality is driven by increasing differences in wages among firms in the same industry. A major driver of such differences is firms’ varying ability to make use of new technology. This is particularly felt in the service sector.

This article summarises The Evolution of Inequality in Productivity and Wages: Panel Data Evidence by Giulia Faggio, Kjell Salvanes and John Van Reenen, CEP Discussion Paper No. 821