orgtheory.net

Kieran

A while ago, Fabio summarized a key pillar of sociological work from the 1970s:

A big finding is that income differences are often really occupational differences. In other words, it’s really easy to understand a lot about a person’s income once you know what specific job they have. Income is really about sorting people into segments of the labor market. IQ or human capital helps you get into the labor markets with better wages, like medicine. Thus, the $150,000 income indicates IQ, inherited wealth, and the fact that mom & dad probably made sure the kid finished college and got a good entry level job at the right company, or signed up for law school.

Well, maybe that was life in the ’70s. In the current issue of ASR we find ChangHwan Kim and Arthur Sakamoto’s paper, “The Rise of Intra-Occupational Wage Inequality in the United States, 1983 to 2002.” The punchline:

Wage inequality has increased dramatically in the United States since the 1980s. This article investigates the relationship between this trend and occupational structure measured at the three-digit level. Using the Current Population Survey from 1983 to 2002, we find that the direct association between occupations and wage inequality declined over this period as within-occupational inequality grew faster than between-occupational inequality. … The results indicate that changes in mean wages across occupations vary depending on the characteristics of individuals in those occupations and that intra-occupational inequality is difficult to predict using conventional labor force data. These findings seem largely inconsistent with the common sociological view of occupation as the most fundamental feature of the labor market. Correspondingly, a more comprehensive approach—one that incorporates the effects of organizational variables and market processes on rising wage inequality in the New Economy—is warranted.

In the discussion, the authors argue that “occupations are becoming less directly associated with wages” even with quite fine-grained occupational categories. Seventy percent of the increase in wage inequality from the early ’80s to the early 00’s occurred within rather than between occupations.

The results challenge both the story of skill-biased technological change, on the one hand, and accounts – e.g., of the Grusky/Weeden variety (Hi, Kim!) – that emphasize the importance of social closure at the occupational level. (On the latter point, I wonder whether debate will focus on the specific theoretical conception and empirical operationalization of the idea of a pure occupational effect, net of the demographic characteristics of individuals within the occupation.)

Interestingly, the authors suggest that perhaps shifts in the organizational rather than strictly occupational structure of the economy may be partly responsible for the observed trends, as e.g. “the rise of huge multinational firms operating alongside traditional retail shops has increased the variance in the organizational structure of employers” together with the decline of internal labor markets in large firms. Analyses based on occupational codes can’t capture this change. The increasing salience of within-category ranking schemes (with big returns to those at the top) is also relevant.