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Basically a group of researchers at NBER have concluded that inequality between firms has skyrocketed, and employees of those firms all go along for the ride. A small number of "super firms" have become enormously successful, and within these super firms inequality between the CEO and the worker bees hasn't changed much at all. They pay all their employees more than the average firm, from the CEO down.

The chart on the right tells the story. Ignore the green line for the moment and just look at the blue and red lines. The red line shows that the top tenth of firms have far outperformed everyone else. The blue line shows that workers follow the same pattern. The ones who work for the top firms get paid a lot more than the folks who work for average firms.

As it turns out, some industries have more super firms than others and thus contribute more to growing income inequality. The FIRE sector—Finance, Insurance, Real Estate—is the most obvious example. Both firm revenue and individual compensation has gone up far more than in any sector. But other sectors have their superstars too, and individuals at those firms get paid a lot more than a similar worker at a firm that's not doing so well.

Earnings inequality in the United States has increased rapidly over the last three decades, but little is known about the role of firms in this trend. For example, how much of the rise in earnings inequality can be attributed to rising dispersion between firms in the average wages they pay, and how much is due to rising wage dispersion among workers within firms? Similarly, how did rising inequality affect the wage earnings of different types of workers working for the same employer—men vs. women, young vs. old, new hires vs. senior employees, and so on? To address questions like these, we begin by constructing a matched employer-employee data set for the United States using administrative records. Covering all U.S. firms between 1978 to 2012, we show that virtually all of the rise in earnings dispersion between workers is accounted for by increasing dispersion in average wages paid by the employers of these individuals. In contrast, pay differences within employers have remained virtually unchanged, a finding that is robust across industries, geographical regions, and firm size groups. Furthermore, the wage gap between the most highly paid employees within these firms (CEOs and high level executives) and the average employee has increased only by a small amount, refuting oft-made claims that such widening gaps account for a large fraction of rising inequality in the population.

Silly Jon. Harvard is merely second best in terms of the mostest rejection letters to applicants, anyway. Stanford is number one now. I'm sure that they can do even BETTER next year, though. I think that they are determined to stay number one, which is probably why they are encouraging more "low income" students to apply.

How much money you make is who you are?

No-- but it is how much you are worth.

Well - not to nit pick - it's how many DOLLARS you are worth. Not how much you are worth. That's a much more complicated analysis. But maybe that's what you meant anyway. I need more coffee.

Well - not to nit pick - it's how many DOLLARS you are worth. Not how much you are worth. That's a much more complicated analysis. But maybe that's what you meant anyway. I need more coffee.

No, they're both the same thing, because if you're not contributing to the global hyper-economy by acquiring expensive baubles to make your neighbors feel bad about how little they're contributing to the global hyper-economy, what good are you?

Did I do it right, Jon?