This paper links data on establishments and individuals to analyze the role of establishments in the increase in inequality that has become a central topic in economic analysis and policy debate. It decomposes changes in the variance of log earnings among individuals into the part due to changes...

We augment standard ln earnings equations with variables reflecting unmeasured attributes of workers and measured and unmeasured attributes of their employer. Using panel employee-establishment data for US manufacturing we find that the observable employer characteristics that most impact...