Average is Over, installment #1437

Over the past few decades, we find that about 80% of the widening residual wage inequality to be within jobs.

Furthermore, performance-pay incidence is the single largest factor behind that, accounting for 42% of those changes.  Of course this brings us back to the least popular explanation for growing income inequality, namely that we measure productivity better than before, and reward it accordingly.

That is all from a new NBER working paper by Rongsheng Tang, Yang Tang, and Ping Wang.


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