Management Papers

Document Type

Journal Article

Date of this Version

4-1-2016

Publication Source

Academy of Management Review

Volume

41

Issue

2

Start Page

324

Last Page

348

DOI

10.5465/amr.2013.0451

Abstract

Focusing on developed countries, I present a model explaining how firms help determine rates of income inequality at the societal level. I propose that the manner in which firms reward individuals for their labor, how they match individuals to jobs, and where they place their boundaries contribute to levels of income inequality in a society. I argue that the determinant of these three processes is due, in part, to the effect of systems of corporate governance on the power and influence of different organizational stakeholders, resulting in variance in the types of employment relationships that predominate in a society. I conclude with a discussion of the research implications of emphasizing employers and employment practices as key determinants of societal-level income inequality.

Copyright/Permission Statement

The original, published article is available at: http://dx.doi.org/10.5465/amr.2013.0451

Keywords

income inequality, employment relationship, internal labor markets, wage setting, job matching, firm boundaries, corporate governance, executive compensation

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Date Posted: 19 February 2018

This document has been peer reviewed.