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Using earnings data from the U.S. Census Bureau, this paper analyzes the role of the employer in explainingthe rise in earnings inequality in the United States. We first establish a consistent frame of analysis appropriatefor administrative data used to study earnings inequality. We show that the trends in earnings inequality in theadministrative data from the Longitudinal Employer-Household Dynamics Program are inconsistent withother data sources when we do not correct for the presence of misused SSNs. After this correction to theworker frame, we analyze how the earnings distribution has changed in the last decade. We present adecomposition of the year-to-year changes in the earnings distribution from 2004-2013. Even whensimplifying these flows to movements between the bottom 20%, the middle 60% and the top 20% of theearnings distribution, about 20.5 million workers undergo a transition each year. Another 19.9 million movebetween employment and nonemployment. To understand the role of the firm in these transitions, weestimate a model for log earnings with additive fixed worker and firm effects using all jobs held by eligibleworkers from 2004-2013. We construct a composite log earnings firm component across all jobs for a workerin a given year and a non-firm component. We also construct a skill-type index. We show that, while thedifference between working at a low- or middle-paying firm are relatively small, the gains from working at atop-paying firm are large. Specifically, the benefits of working for a high-paying firm are not only realizedtoday, through higher earnings paid to the worker, but also persist through an increase in the probability ofupward mobility. High-paying firms facilitate moving workers to the top of the earnings distribution andkeeping them there.This work received support from NSF Grants SES-0339191, CNS-0627680, SES-0922005, TC-1012593, and SES- 1131848. This paper was written while the the third author was a Pathways Intern at the U.S. Census Bureau. We have benefited from discussions with David Card, John Eltinge, Patrick Kline, Francis Kramarz, Kristin McCue, Ian Schmutte, Lars Vilhuber, participants at the NBER conference that preceded this volume, the editors of this volume, Edward Lazear and Kathryn Shaw, and two anonymous referees. Sara Sullivan edited the final manuscript. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the U.S. Census Bureau or other sponsors. All results have been reviewed to ensure that no confidential information is disclosed. This research uses data from the Census Bureau's Longitudinal Employer-Household Dynamics Program, which was partially supported by the following National Science Foundation Grants: SES-9978093, SES-0339191 and ITR-0427889; National Institute on Aging Grant AG018854; and grants from the Alfred P. Sloan Foundation

Earnings Inequality and Mobility Trends in the United States: Nationally Representative Estimates from Longitudinally Linked Employer-Employee Data