Changes In Earnings Inequality Research Articles

Cumulative Disadvantage Dynamics for Palestinian Israeli Arabs in Israel’s Economy

Recruiting the cumulative advantage mechanism, this study explores how earnings inequality between dominant and minority groups in the same society unfolds over the life course. Jews and Palestinian Israeli Arabs in Israel’s economy provide the context for this study. We find that the earnings gap between the groups has widened over time, particularly among men. This trend is hardly mediated by education, since returns to education have increased at similar rates for both. This finding leaves discrimination a plausible explanation, as the net group membership effect is positive and growing in strength with time. Among women, by contrast, the entire earnings gap is explained by self-selection out of employment, particularly among the less-educated. The consequences of these findings for changes in earnings inequality between dominant and minority groups in divided societies are discussed.

Between Firm Changes in Earnings Inequality: The Dominant Role of Industry Effects

We find that most of the rising between firm earnings inequality that dominates the overall increase in inequality in the U.S. is accounted for by industry effects. These industry effects stem from rising inter-industry earnings differentials and not from changing distribution of employment across industries. We also find the rising inter-industry earnings differentials are almost completely accounted for by occupation effects. These results link together the key findings from separate components of the recent literature: one focuses on firm effects and the other on occupation effects. The link via industry effects challenges conventional wisdom.

A Quantitative Review of Marriage Markets: How Inequality is Remaking the American Family by Carbone and Cahn

June Carbone and Naomi Cahn argue that growing earnings inequality and the increased educational attainment of women, relative to men, have led to declining marriage rates for less-educated women and an increase in positive assortative matching since the 1970s. These trends have negatively affected the welfare of children, as they increase the proportion of poor, single-female-headed households. Using data on marriage markets defined by state, race and time, and the Choo–Siow marriage matching function, this review provides a quantitative assessment of these claims. We show that changes in earnings inequality had a qualitatively consistent but modest quantitative impact on marriage rates and positive assortative matching. Neither changes in the wage distributions nor educational attainments can explain the large decline in marriage rates over this period. (JEL C78, D63, J12, J15, J16, J31)

Changes in Wage Inequality in Mexico: A Decomposition Analysis

We analyse the changes in earnings inequality in Mexico and the Mexican regions from 1987 to 2008. Using the Jenkins-van Kern decomposition method, we distinguish two major components: progressivity, which reflects the pro-poor (or pro-rich) orientation of wage growth, and re-ranking, which measures the movements of individuals in the wage hierarchy. At the national level, progressivity has been systematically pro-poor, but re-ranking has to a large extent offset this pro-equality dynamic. Similar variations are found for the Mexican regions. The South, the Border and the Centre have, however, witnessed a decrease in inequality, whereas inequality has increased in the North and the Capital regions.

Distinct paths to higher inequality?: A Qualitative Comparative Analysis of rising earnings inequality among U.S. States, 1980–2010

In this paper Qualitative Comparative Analysis (QCA) is used to explore the extent to which states have taken distinct causal paths to higher levels of earnings inequality within the 1980s, 1990s, 2000s, and during the early years of the 2007–09 recession. In these analyses special attention is paid to both the regional unfolding of the processes constituting economic restructuring and whether state institutional arrangements appear to mediate the impacts of inequality-increasing developments. Overall, these analyses suggest that industry and occupational shifts are critical to understanding state and regional experiences; state variation in changes in earnings inequality are, in large part, a story of the continuous playing out of economic restructuring in unique ways in different areas of the country. However, the subnational impact of the growth or decline of particular types of occupations on the earnings distribution is found to be highly contingent, depending on both the types of jobs gained or lost and the institutional and economic context in which those developments occur. It is suggested that the overall contribution of industry shifts to rising inequality may be underemphasized, in part, as a result of a reliance on analytical approaches that are ill-suited to capture the complicated and contingent nature of the impacts of processes such as deindustrialization. These analyses contribute to a growing body of work that employs a distinctly sociological approach in which earnings determination is viewed as multi-level phenomenon. Building on this insight, this paper suggests that changes in subnational levels of inequality may also be usefully conceptualized as an inherently combinatorial phenomenon.

Post Schooling Human Capital Investments and the Life Cycle Variance of Earnings

We propose an original model of human capital investments after leaving school in which individuals differ in their initial human capital obtained at school, their rate of return, their costs of human capital investments and their terminal values of human capital at a fixed date in the future. We derive a tractable reduced form Mincerian model of log earnings profiles along the life cycle which is written as a linear factor model in which levels, growth and curvature of earnings profiles are individual-specific. Using panel data from a single cohort of French male wage earners observed over a long span of 30 years, a random effect model is estimated first by pseudo maximum likelihood methods. This step is followed by a simple second step fixed effect method by which individual-specific structural parameters are estimated. This allows us to test restrictions, compute counterfactual profiles and evaluate how earnings inequality over the life-cycle is affected by changes in structural parameters. Under some conditions, even small changes in life expectancy seem to imply large changes in earnings inequality.

Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation

This study exploits longitudinal employer–employee matched data from the U.S. Census Bureau to investigate the contribution of worker and firm reallocation to changes in earnings inequality within and across industries between 1992 and 2003. We find that factors that cannot be measured using standard cross‐sectional data, including the entry and exit of firms and the sorting of workers across firms, are important sources of changes in earnings distributions over time. Our results also suggest that the dynamics driving changes in earnings inequality are heterogeneous across industries.

Earnings inequality and unemployment in South Africa

Unemployment and earnings inequality have moved together remarkably closely in South Africa in recent years. This article explores the relationship between unemployment and earnings inequality in South Africa, investigating the extent to which changes in unemployment can account for changes in earnings inequality. Static and dynamic decompositions of earnings inequality by employment status reveal the centrality of unemployment in accounting for the both level and trend of earnings inequality. The distribution of employment in the formal and informal sectors is found to be of lesser importance in explaining earnings inequality, as is wage dispersion within each of these categories. The findings point to the central importance of reducing unemployment in South Africa if the extremely high levels of inequality are to be reduced.

Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation

This paper exploits longitudinal employer-employee matched data from the U.S. Census Bureau to investigate the contribution of worker and firm reallocation to changes in earnings inequality within and across industries between 1992 and 2003. We find that factors that cannot be measured using standard cross-sectional data, including the entry and exit of firms and the sorting of workers across firms, are important sources of changes in earnings distributions over time. Our results also suggest that the dynamics driving changes in earnings inequality are heterogeneous across industries.

Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation

This paper uses matched employer-employee data from the U.S. Census Bureau to investigate the contribution of worker and firm reallocation to changes in wage inequality within and across industries between 1992 and 2003. We find that the entry and exit of firms and the sorting of workers and firms based on underlying worker skills are important sources of changes in earnings distributions over time. Our results suggest that the underlying dynamics driving changes in earnings inequality are complex and are due to factors that cannot be measured in standard cross-sectional data.

Poverty in New York City, 1969-99: The Influence of Demographic Change, Income Growth, and Income Inequality

The four-year rise in the U.S. poverty rate that began with the 2001 recession and the aftermath of Hurricane Katrina has sparked renewed interest in poverty among researchers and policymakers. Policies for addressing poverty are influenced by perceptions of its causes. Accordingly, this article evaluates the impact of several purported causes of poverty in New York City. Using decennial census data for 1970-2000, the authors employ simulations and a decomposition framework to investigate the relationship between poverty and key demographic and economic changes in the city. They find that two demographic changes - the growing percentage of the city's black and Hispanic populations and the increasing share of residents living in female-headed families - are clearly associated with the city's rise in poverty from 1969 to 1979 and the continued high poverty rate from 1979 to 1999. However, when these demographic changes are placed in the context of income growth and expanding income inequality, the study finds that the rise in income inequality plays a larger role in the 1979-99 persistence of poverty than do demographic changes. The authors also explore the influence of changes in earnings inequality on income inequality and poverty. They find a considerable increase in poverty and an expansion of earnings inequality within a key element of the city's population: persons living in full-year working families. The rise in earnings inequality can be traced to the stagnation of wages at the low end of the earnings distribution.

REDISTRIBUTIVE OUTCOMES OF SICKNESS INSURANCE ON INCOME: AN EMPIRICAL STUDY OF SOCIAL INSURANCE INSTITUTIONS

We analyzed the redistributive outcomes of sickness benefits using a typology of social insurance institutions, including four different systems, after adjusting for sickness risk factors. The aim is to empirically observe if the expected redistributive pattern of the typology could be verified whether or not considering the variations in sickness risk across the countries. Data on household earnings and sickness benefits in ten countries and for different years were taken from the Luxembourg Income Study. We also used data on labor force demography and educational attainment. Gini coefficients were used for measuring earnings inequality. Relative changes in earnings inequality for sickness benefits were predicted by social insurance institutional dummies using multiple regression analyses. Among the four different schemes, the encompassing system is found to be most redistributive, followed by basic security and targeting systems. The corporatist system has shown no significant difference from the encompassing system in redistributive outcomes.

Evolution or Revolution? Disparities in Earnings and Household Income in the Czech Republic 1988-2002

This paper draws on income surveys covering the period 1988-2002 to illustrate the changes in inequality of earnings and household incomes, the main factors behind their disparities, and the connections between these two distributions. The first part suggests a systemic change occurred, leading from the application of the need principle to the assertion of the principle. In the second part, the changing importance of individual factors of earnings in favour of education and occupation is demonstrated. In the third part, the intermediating factors between earnings and household are presented and income packaging is analyzed. More income is collected from the labour market and more of it is redistributed by the state. A systemic change occurred on one principal axis - the much greater role of education in the entire process.

A Life Cycle Perspective on Changes in Earnings Inequality among Married Men and Women

The connection between changes in earnings inequality of individuals and changes in family earnings involves several links: the movements in the employment of different family members, the association between changes in husbands' and in wives' earnings, and patterns of assortative mating. A decomposition of the logarithm of the coefficient of variation in family earnings identifies these links. The data on the dispersion of family earnings are organized not simply over time, but also by age. The growth in wives' relative employment and earnings has partly offset the effects on family earnings inequality of the increase in husbands' earnings inequality.

EARNINGS INEQUALITY IN USA, 1969-99: COMPARING INEQUALITY USING EARNINGS EQUATIONS

A simple decomposition method using an earnings equation is proposed by synthesizing two decomposition methodologies, those of Juhn, Murphy, and Pierce (1993) and Fields (2003), in order to study changes in earnings inequality in America during the last three decades in the 20th century. The proposed method enables us to compute both aggregate and detailed decompositions of changes in earnings inequality. The decomposition of earnings inequality change during the last three decades in 20th century shows that the increase in earnings inequality in America was caused by changes in the wage structure and the distribution of unobservables. The premium to education contributes substantially to the widening of earnings inequality during the 1980s and 1990s. A decreasing male wage premium contributes to leveling earnings inequality.

Earnings Inequality and Market Work in Husband-Wife Families

Constructing pseudo-panel data from successive Current Population Surveys, this paper analyzes earnings inequality in husband and wife families over the life cycle and over time. Particular attention is devoted to the role of labor supply in influencing measures of earnings inequality. Compact and accurate descriptions of earnings inequality are derived that facilitate the analysis of the effect of the changing market employment of wives on earnings inequality. The growing propensity of married women to work for pay has mitigated the increase in family earnings inequality. Alternative measures of earnings inequality covering people with different degrees of attachment to the labor market are constructed. Inferences about the extent and changes in earnings inequality are sensitive to alternative labor supply definitions especially in the case of wives.

Accounting for Changing Earnings Inequality in Costa Rica, 1980–99

After declining from the mid-1970s to the mid-1980s, inequality in monthly earnings in Costa Rica stabilised from 1987 to 1992 and then increased from 1992 to 1999. In this article, we use recently developed techniques to measure the extent to which these changes in earnings inequality were the result of changes associated with the distributions of personal and workplace characteristics of workers or the earnings differences associated with those characteristics. We present evidence that the most important cause of the fall in inequality prior to 1987 was a decline in returns to education. Inequality stopped falling in Costa Rica in the 1990s in part because returns to education stopped falling. The most important cause of rising inequality in monthly earnings in the 1990s was an increase in the proportion of workers working a non-standard work week (part-time or over-time).

Within-Cohort Earnings Inequality Among Canadian Men: 1971-1982

This paper presents resultsfrom a study of recent changes in earnings inequality within cohorts of Canadian men defined by levels of schooling and age. Data are taken from seven Surveys of Consumer Finances during the period 1971 through 1982.

Decomposing Lorenz and Concentration Curves*

We decompose the Lorenz curve (LC) and its associated concentration curve (CC) by population subgroups. To illustrate these decompositions, we examine changes in earnings inequality among West Germans, East Germans, and foreign guest workers during the recent German unification. We show that East German earnings have become less concentrated in the lower deciles of the overall German earnings distribution, whereas the earnings of West Germans and foreign guest workers have become more concentrated in the lower deciles.

Earnings disparities in the czech republic: evidence of the past decade and cross-national comparison

Wage and income surveys are used to display changes in inequality of earnings and main factors of disparities. In the first part, increasing disparities in the Czech Republic and the decreasing weight of demographic characteristics in wage determination are observed. In the second part, available evidence on cross-national comparison is gathered in order to demonstrate the increasing similarity of the Czech wage structure with Western countries. We document that the introduction of the market economy has led to a significant increase in earnings disparities; the