Employment in Service Activities and Inequality in Metropolitan Areas

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Abstract
This article explores the influence of various service industries on male earnings inequality within the 125 largest metropolitan areas in the United States. The data indicate that service sector employment increases inequality. Contrary to past literature suggesting that service growth proliferates low-paying occupational positions that increase inequality, however, multiple regression analyses demonstrate that increasing inequality is more a function of high-paying jobs in "producer services"—the service sector providing financial resources as well as technical and legal expertise to the business community. Greater concentrations of producer services in metropolitan areas increase the proportion of workers with exceedingly high incomes without affecting median incomes. Consequently, when producer services are extensive in an area, earnings distributions are more skewed and unequal.