Resumen de Matching, Reallocation and Changes in Earnings Dispersion

Simon Burgess, Julia Lane, Kevin McKinney

• The ‘fractal’ nature of the rise in earnings dispersion is one of its key features. In this paper, we offer a new perspective on the causes of changes in earnings dispersion, focusing on the role of labour reallocation. We set out a framework showing that job and worker reallocation affects earnings dispersion. We quantify this using a data set comprising almost the universe of workers and employers in Maryland. The changing allocation of workers to jobs played a significant role in explaining movements in the dispersion of earnings.