Today, some people will enjoy treats, some will suffer tricks. It’s not really that different from the functioning of the labor market. A recent article by Josh Zumbrun asks us to imagine two workers who are the same age, gender, race, have similar educational backgrounds, live in the same community, work in the same occupation and industry.
One would think that over time, these two individuals will have similar earnings, but in practice, they don’t. According to a new paper from Harvard University’s Richard Freeman, the reason is that over the years, inequality is expanding between workers at different companies.
Some companies are incredibly successful – the workers at those companies benefit tremendously from that shared success. Other companies enjoy more mundane existences. Here is how Professor Freeman explains rising income inequality: " The earnings of workers with near clone similarity in attributes diverged so much by the place they worked that rising inequality in pay among employers has become the major factor."
