This article documents the increasing dispersion of capital-labour ratios across firms in the US and provides some empirical evidence of a positive correlation at the two-digit industry level between the dispersion of capital-labour ratios across firms and residual wage inequality. To explain this empirical fact, the article adopts a search model where the exogenous decline in the relative price of equipment capital makes the distribution of capital-labour ratios more dispersed and increases wage dispersion among identical workers. OLS estimates of the relationship between capital dispersion and the relative price of equipment capital support the main hypothesis of the model.

Firm heterogeneity in capital-labor ratios and wage inequality / M. Leonardi. - In: ECONOMIC JOURNAL. - ISSN 0013-0133. - 117:518(2007), pp. 375-398.

Firm heterogeneity in capital-labor ratios and wage inequality

M. Leonardi
2007

Abstract

This article documents the increasing dispersion of capital-labour ratios across firms in the US and provides some empirical evidence of a positive correlation at the two-digit industry level between the dispersion of capital-labour ratios across firms and residual wage inequality. To explain this empirical fact, the article adopts a search model where the exogenous decline in the relative price of equipment capital makes the distribution of capital-labour ratios more dispersed and increases wage dispersion among identical workers. OLS estimates of the relationship between capital dispersion and the relative price of equipment capital support the main hypothesis of the model.
Settore SECS-P/01 - Economia Politica
2007
Article (author)
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2434/41629
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