Abstract
Germany has experienced sharply rising earnings inequalities, both between and within workplaces. Working from prior literature on rising employment dualization and the fissuring of workplaces into high and low wage employers, we explore a set of organizational explanations for rising between and within workplace inequality focusing on the role of employment dualization, skill segregation/complexity, and firm fissuring. We describe and model these hypothesized processes with administrative data on a large random sample panel of German workplaces. We find that rising inequalities are associated with polarization in industrial wage rates and the birth of new low wage workplaces, as well as increased establishment skill specialization and the growth of part-time jobs in workplace divisions of labor. We conclude with recommendations for future research that directly examines more proximate mechanisms and their relative importance in different institutional contexts.
Highlights
Economists, organizational scholars, and sociologists [1,2,3] have advanced strong theoretical and empirical arguments that social scientists should increase their focus on the role of workplaces in generating earnings inequalities
The main empirical contribution of this paper is to develop and explore a set of available organizational explanations for rising between and within workplace inequality, focusing on the role of employment dualization [4], workplace and industry skill segregation [5], and firm fissuring [7]
We directly model the impact of both establishment births and part-time labor on rising within and between workplace inequality
Summary
Economists, organizational scholars, and sociologists [1,2,3] have advanced strong theoretical and empirical arguments that social scientists should increase their focus on the role of workplaces in generating earnings inequalities. Recent research has discovered that in multiple countries rising earnings inequalities have been associated with between workplace polarization in wage rates [4,5,6], underlining the importance of developing robust analyses of workplace inequality processes. The main empirical contribution of this paper is to develop and explore a set of available organizational explanations for rising between and within workplace inequality, focusing on the role of employment dualization [4], workplace and industry skill segregation [5], and firm fissuring [7]. Within workplace earnings dispersion increased 22.7%, while between workplace earnings dispersion surged by 56.8%
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