Chapter 4 - The Growth in Male Earnings Inequality, 1973–1988: The Role of Earnings Capacity and Utilization

Abstract

Abstract Estimates of the increase in earnings inequality among males since the early 1970s are presented using several measures of inequality. The increase in earnings inequality for male workers is substantially less than that for all males of working age. The results indicate that the increase in male earnings inequality may have had less to do with changes in labor market opportunities than previous researchers have suggested and more to do with the choices of individuals regarding both work hours and wage rates. The concept of “earnings capacity” is employed in the analysis, and estimates are presented of the changes in inequality of both earnings capacity and the utilization of earnings capacity using data from the March 1974 and 1989 Current Population Surveys.