Kansas City Fed explores sources of wage dispersion in the US

Paper explores relative importance of “lifetime differences” and “match-specific” factors

Kansas City Fed: new research

Wage inequality can be determined more over the short term by where people work than longer-term factors such as skill, health or ability, argues a research paper published by the Federal Reserve of Kansas City.

Dissecting wage dispersion, by San Cannon and José Mustre-del-Río, aims to discover how much of wage inequality is due to “who you are”, a permanent component, versus “where you work”, the match-specific component. The permanent component is the variation in wages that “results from

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