Hierarchies allow individuals to leverage their knowledge through others` time.This mechanism increases productivity and ampli…fies the impact of skill heterogeneity on earnings inequality. To quantify this effect, we analyze the earnings andorganization of U.S. lawyers and use an equilibrium...

Earnings inequality has increased substantially since the 1970s. Using evidence changes from con…dential Census data on U.S. law offices on lawyers'organization and earnings, we study the extent to which the mechanism suggested by Lucas (1978) and Rosen (1982), a scale of operations effect...