More quitters or less rentiers?
I wonder whether this trend of falling quits reflects the notion that inequality between firms is rising, leading to a situation where people at “winning” firms stay put and lock out those at stagnating or failing firms.
Rather, than suggesting the recovery is still weak, it may suggest a structural downward trend in quits over time.
“We find strong evidence that within-firm pay inequality has remained mostly flat over the past three decades,” said the authors, Jae Song of the Social Security Administration, Fatih Guvenen, a professor at the University of Minnesota, and David J. Price and Nicholas Bloom, both at Stanford University.
Jason Furman and Peter Orszag cite this and other research in their recent paper, but
Song et al. found that essentially all of the increase in national wage inequality from 1978 to 2012 stemmed from increasing disparities in average pay across companies. By contrast, their analysis suggests that the wage gap between the highest-paid employees and average employees within firms explains almost none of the rise in overall inequality. Figure 10 and Figure 11 show that white individual wage disparities have clearly increased in recent decades, virtually all the increased dispersion is attributable to inter-firm 13 dispersion rather than intra-firm dispersion.
So theoretically, this trend would be mean lower peaks of quit rates during the business cycle.
Maybe it’s not quitters, but policies that reduce market rents.
Per Furman and Orszag:
“…our hypothesis highlights the potential role of rents in the rise in inequality, extending their role to explain the increase in earnings inequality and pushing back the date of their importance to about 1990 — when the distribution of returns on capital across firms began to grow increasingly skewed.”
