Wage and productivity dispersion in United States manufacturing: The role of computer investment

Using establishment-level data, we shed light on the sources of the changes in the structure of production, wages, and employment that have occurred over recent decades. Our findings are: (1) the between-plant component of wage dispersion is an important and growing part of total wage dispersion; (2) much of the between-plant increase in wage dispersion is within industries; (3) the between-plant measures of wage and productivity dispersion have increased substantially over recent decades; and (4) a significant fraction of the rising dispersion in wages and productivity is accounted for by changes in the distribution of computer investment across plants.