Outsourcing, Occupationally Homogeneous Employers, and Growing Wage Inequality in the United States

Elizabeth Weber Handwerker

Abstract

This paper develops measures of the occupational homogeneity of employers as indicators of outsourcing. Findings are threefold. First, workers in low-wage occupations saw their employing establishments become more occupationally homogeneous during 2002-2016. Second, wages are strongly related to occupational homogeneity, particularly for workers in low-wage occupations. Third, changes in the occupational homogeneity of workplaces are an important contributor to growing wage inequality among workers in the lower 98.5% of the wage distribution over this period. The growing separation of workers in low-wage occupations into different employers from workers in high-wage occupations is an important part of wage inequality growth.