Organization Of Production And The Distribution Of Labor Income In Spain

This paper examines evidences of market labor income inequality in Spain, as if they were the outcome of the market equilibrium from occupational choices of individuals with different general skills. We find that the parameters of the distribution of skills, production technology, and internal organization of firms that match the observed organization of production (number of persons occupied as employees, entrepreneurs-managers and solo self-employed, distribution of firm sizes) in Spain, also explain reasonably well the distribution of market labor income, within groups and for all occupied individuals together. The proposed model can be of use in evaluating the potential consequences for labor income inequality of changes in the organization of production.