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Outsourcing, Occupationally Homogeneous Employers, and 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, wages are strongly related to occupational homogeneity, particularly for workers in low-wage occupations. Second, by some measures, workers—particularly those in lower-wage occupations—saw their employing establishments become more occupationally homogeneous during 2004-2019. Third, changes in the occupational homogeneity of workplaces are an important contributor to growing wage inequality among workers over the first half of this period. The growing sorting and segregation by occupation of workers into different employers is an important part of wage inequality growth.