Why do some occupations pay more than others? Social closure and earnings inequality in the United States

Abstract

This article elaborates and evaluates the neo-Weberian notion of social closure to investigate positional inequality in the United States. It argues that social and legal barriers around occupations raise the rewards of their members by restricting the labor supply, enhancing diffuse demand, channeling demand, or signaling a particular quality of service. Hypotheses derived from the closure perspective are evaluated using new data that map five institutionalized closure devices - licensing, educational credentialing, voluntary certification, association representation, and unionization - onto 488 occupations. Results from multilevel models demonstrate that closure practices, particularly those that generate tangible restrictions on the labor supply, shape the contemporary structure of occupational earnings. Returns to these strategies vary across occupations but are not tightly linked to the complexity of the occupation's knowledge base. If suitably elaborated, closure theory thus offers a promising complement to individualistic explanations of earnings inequality.