The Spillover Effects of Top Income Inequality

Since the 1980s top income inequality within occupations as diverse bankers, managers, doctors, lawyers and scientists has increased considerably. Such a broad pattern led literature to search for common explanation. In this paper, however, we argue that increases in originating few can spill overinto others creating broader changes inequality. particular, study an assignment model where generalists with heterogeneous buy services of doctors ability. equilibrium highest earning match quality among feed directly into doctors. We use data from Decennial Census well American Community Survey 1980 2014 test our theory. Specifically, identify which consumption-driven theory predicts spill-overs it does not show patterns align predictions model. using Bartik-style instrument, increase general causes higher dentists real estate agents; fact accounts most these occupations.