Most earnings inequality growth occurred within industries, not between them.

Evidence

We measure earnings inequality as the variance of log annual earnings. Figure 3c presents the overall earnings dispersion trend. Consistent with previous studies, it shows that, from 1970 to 2008, the level of compensation-related income inequality increased from 0.34 to 0.47, or by about 40%. A variance decomposition shows that before the early 2000s, there was virtually no growth of between-industry variance in the nonfinance sector of the U.S. economy. Thus, most of the growth in variance occurred within rather than between industries. — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 81

Figure 3c presents the overall earnings dispersion trend. Consistent with previous studies, it shows that, from 1970 to 2008, the level of compensation-related income inequality increased from 0.34 to 0.47, or by about 40%. A variance decomposition shows that before the early 2000s, there was virtually no growth of between-industry variance in the nonfinance sector of the U.S. economy. Thus, most of the growth in variance occurred within rather than between industries. — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 81

Categorization

• QUESTION: Worth checking whether this within-industry finding holds for finance versus nonfinance — the reader’s central comparison.
• corroborated: 2 independent passages support this claim — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 81
• XREF: connects to: Financialization raises earnings inequality across most US industries — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 152; Financial-sector workers’ pay since the 1980s far outstripped national averages, driving inequality. — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 76; US inequality since 1970 grew mostly within rather than between industries — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 63

Related

• Financialization raises earnings inequality across most US industries (similarity 0.88)
• Declining industries show rising earnings inequality (similarity 0.87)
• US inequality since 1970 grew mostly within rather than between industries (similarity 0.87)
• Financialization trajectories diverged across industries after 1997 (similarity 0.87)
• Financial-sector workers’ pay since the 1980s far outstripped national averages, driving inequality. (similarity 0.86)
• Financialization independently explains over half of labor’s falling income share since 1970. (similarity 0.85)
• Financialization drives earnings inequality nearly as much as declining unionization (similarity 0.85)
• Financialization caused most of the decline in labor’s income share since 1970 (similarity 0.83)
• Prior research linked financialization to inequality mostly indirectly, not causally. (similarity 0.82)
• Inequality dimensions reflect one institutional shift toward financialization (similarity 0.82)
• Counterfactual independence assumptions likely understate financialization’s true inequality impact (similarity 0.80)
• Financialization channels income toward the wealthy and depresses productive investment and wages. (similarity 0.80)
• Deunionization still leaves much wage inequality unexplained, pointing to financialization (similarity 0.80)
• US income inequality roughly doubled between 1980 and 2007. (similarity 0.80)
• Financialization’s inequality effects accumulate gradually because income dynamics are highly persistent. (similarity 0.79)

Broader Connections

• Financialization raises earnings inequality across most US industries #corroborates (0.85) — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 152
• Financial-sector workers’ pay since the 1980s far outstripped national averages, driving inequality. #complicates (0.80) — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 76