Grantmaking

Recent research finds that most, if not all, of the growth in earnings inequality in the United States may be explained by the growth in inequality across firms or establishments. This finding is consistent with research showing that workers in outsourced establishments—such as call centers, janitorial service companies, or security services—receive lower pay and benefits than those workers doing the same jobs but who are employed by lead or primary firms. But our knowledge of the extent and impact of outsourcing on a broader set of workers is limited, in large part because of data constraints.

This study will provide evidence based on rigorous, quantitative analysis of the extent to which outsourcing has contributed to inequality in the United States. The study will rely on Longitudinal Employer-Household Dynamics data linked with American Community Suvey data and will use the methodology established in a previous paper based on German data. A key shortcoming of the LEHD data is that it does not have information on occupation. By linking to ACS data, the authors will be able to observe occupation for a subset of those in the LEHD dataset and to assess the effects of outsourcing on outcomes besides earnings—most critically, health insurance.