Relative Earnings Research Articles

Skill-Biased Technical Change and the Cost of Higher Education

We document the growth in higher education costs and tuition over the past 50 years. To explain these trends, we develop a general equilibrium model with skill- and sector-biased technical change. Finding the model’s parameters through a combination of estimation and calibration, we show that it can explain the rise in college costs between 1961 and 2009, along with the increase in college attainment and the change in the relative earnings of college graduates. The model predicts that if college costs had ceased to grow after 1961, enrollment in 2010 would have been 3%–6% higher.

Political economy of family life: couple’s earnings, welfare regime and union dissolution

This study examines how institutional settings moderate the relation of couples’ relative and absolute earnings to the likelihood of union dissolution. Based on ECHP data, it covers 12 countries in four welfare regimes. The relationship between a couple’s economic dependence and the likelihood of union dissolution were found to differ across regimes. With regard to relative earnings, equality in earnings lowered the risk of separation only in regimes characterized by a high degree of defamilialization, through either the state or the market. As for absolute earnings, women’s and men’s earnings were significantly related to the risk of union dissolution only in regimes where state defamilialization is low.

Polarization or upgrading? Evolution of employment in transitional Russia

Abstract This paper discusses the structural changes in Russian employment and explores whether the evolution of employment from 2000 to 2012 followed the scenario of progressive upgrading in job quality or brought about the polarization of jobs in terms of quality. Jobs are defined in this study as occupation-industry cells, and their quality is measured through relative earnings and education level. Using detailed micro-data from a few complementary large-scale surveys, we rank all jobs according to the earnings and educational criteria and divide these distributions into five quintiles. At the next stage, we explore dynamic changes in job quality and socio-demographic characteristics of workers in different quintiles. The paper rejects the polarization scenario and confirms the upgrading hypothesis.

Poor university professors? The relative earnings decline of German professors during the twentieth century

ABSTRACTUsing individual earnings data from university archives, we analyse the position of university professors within the aggregate income distribution over a time span covering the Kaiserreich, the Weimar Republic, the Third Reich as well as the Federal Republic of Germany. We find that not only did the earnings of professors deteriorate with respect to average incomes, due to the compression of the income distribution, but that professorial earnings no longer sufficed to lift professors into the top 1% of the aggregate income distribution.

The effect of ‘Relative earnings’ and ‘Absolute earnings’ on Women’s Housework : Beyond Exchange - bargaining theory and Gender display

The effect of ‘Relative earnings’ and ‘Absolute earnings’ on Women’s Housework : Beyond Exchange - bargaining theory and Gender display

Trends in Relative Earnings and Marital Dissolution: Are Wives Who Outearn Their Husbands Still More Likely to Divorce?

As women's labor-force participation and earnings have grown, so has the likelihood that wives outearn their husbands. A common concern is that these couples may be at heightened risk of divorce. Yet with the rise of egalitarian marriage, wives' relative earnings may be more weakly associated with divorce than in the past. We examine trends in the association between wives' relative earnings and marital dissolution using data from the 1968-2009 Panel Study of Income Dynamics. We find that wives' relative earnings were positively associated with the risk of divorce among couples married in the late 1960s and 1970s, and that this was especially true for wives who outearned their husbands, but this was no longer the case for couples married in the 1990s. Change was concentrated among middle-earning husbands and those without college degrees, a finding consistent with the economic squeeze of the middle class over this period.

Family Migration and Relative Earnings Potentials

Family Migration and Relative Earnings Potentials

Gender earnings discrimination in Jordan: Good intentions are not enough

AbstractJordan has long been a party to the main international instruments prohibiting discrimination against women, yet it still displays a significant gender pay gap. Using data from the 2002, 2006 and 2008 Household Expenditure and Income Surveys for decomposition analysis, while also accounting for the labour force participation decisions of women and men, the author finds that the pay gap is entirely explained by gender differentials in his estimated coefficients. The gap is initiated upon recruitment into wage employment through “screening discrimination”, though it tends to narrow over time. Women's selectively low participation also contributes to a statistical improvement in their relative earnings.

Comprehensive Wealth of Immigrants and Natives

The 1965 Immigration and Nationality Act had a profound impact on the demographic and skill composition of immigrants arriving in the U.S. A large literature has investigated the relative earnings of immigrants and natives, but much less is known about relative wealth accumulation and the preparation of immigrants for retirement. This paper compares the retirement preparation of older immigrants to that of native-born households using an annualized comprehensive measure of available resources. We find that immigrants have less wealth overall, but that they appear to be drawing down resources at a slower rate. We attempt to make sense of the trends in annualized wealth with the help of a lifecycle framework that incorporates uncertain longevity, bequests, risk in retirement resources, as well as endogenous housing wealth. Simulations from the model indicate that it is difficult to match the observed patterns in annualized wealth without the combination of both an explicit bequest motive and an explicit treatment of housing choice. These patterns mask a good deal of heterogeneity, however, in terms of socioeconomic and demographic characteristics. Some of the largest differences within immigrants occur along the margins of race and ethnicity, as well as the number of years since arrival. The evidence suggests that the typical immigrant is relatively well situated in retirement, but that more recent immigrants have low levels of total resources and are likely to have difficulty maintaining adequate levels of spending in retirement.

The long-term earnings consequences of general vs. specific training of the unemployed

Training programs for the unemployed typically involve training specific skills in demand amongst employers. In 1997, Swedish unemployed could also choose general schooling at the upper secondary level. This offers a unique opportunity to assess the theoretically ambiguous long-term relative earnings of general vs. specific training for unemployed. Analyzing detailed administrative data 1990–2010, we find 1) that specific training is associated with higher earnings in the short run, 2) that earnings converge 5–7 years post program and 3) that individuals act on their comparative advantages. When we extrapolate our estimates to life-time earnings, there is overall a relative advantage of specific training. However, for females with limited prior education, we find a relative life-time earnings advantage of general training.

Education and earnings within dual-earner couples in Central Europe

Purpose – The purpose of this paper is to focus on earnings inequality within dual-earner couples in four Central-East European (CEE) countries: the Czech Republic, Hungary, Poland, and Slovakia. It aims to analyse the factors that influence earnings distribution within couples. Design/methodology/approach – The analysis uses OLS regression applied on the Statistics on Income and Living Conditions 2011 survey to reveal the various influence of relevant factors, especially relative education and the presence of children, on relative earnings. Findings – Women, on average, contribute less to a couple’s income than men. While considerably higher in the Czech Republic and Slovakia, such disparity is relatively low in Hungary and Poland. These countries have the highest share of dual-earner couples where the woman outearns her partner. The factor that substantially reduces the within-couple earnings inequality in all the analysed countries is a higher relative education of women. On the contrary, the presence of children, especially those of younger age, increases this disparity in the Czech Republic and Slovakia. Originality/value – The research on within-couple earning inequality in CEE countries lags behind the relatively rich evidence from western Europe. This is the first study which systematically describes the situation in CEE countries from a comparative perspective.

Gender and distributional preferences: Experimental evidence from India

We conduct a lab experiment to assess whether gender of dictators and recipients, and distributional preferences affect allocations in a modified dictator game where both parties perform a cognitive task and the resulting pie to be split is the sum of both parties’ earnings. Our key results are first, while on average all dictators keep more than their earned share of the pie, they display some respect for merit as the shares appropriated are correlated with their relative earnings. Second, male dictators appropriate a greater share of the pie than females and more is taken from known gender (male) recipients. Finally, most dictators can be classified as egalitarian, meritocratic or selfish. They invoke these fairness views in a situation-specific manner depending on their relative earning status and reveal self-serving biases.

Polarization or upgrading? Evolution of Employment in Transitional Russia

This paper discusses the structural change in the Russian employment and explores whether the evolution of employment in 2000-2012 followed the scenario of progressive upgrading in job quality or brought about the polarization of jobs in terms of their quality. Jobs are defined here as occupation-industry cells and their quality is measured through relative earnings and education levels. Using detailed micro-data from a few complementary large scale surveys, we rank all jobs according to the earnings and educational criteria and divide these distributions into 5 quintiles. At the next stage, we explore dynamic changes in job quality and socio-demographic characteristics of workers in different quintiles. The paper rejects the polarization scenario and confirms the upgrading hypothesis.

Breaking the Glass Ceiling: Local Gender‐Based Earnings Inequality and Women's Belief in the American Dream

This article ties together research on gender, income inequality, and political ideology, by exploring the effect of gender‐based earnings inequality on women's belief in a fundamental tenet of the “American Dream”—meritocracy. Focusing on gender‐based earnings inequality in women's local residential context, and drawing upon relative deprivation theory, this article argues that variation across local areas in the relative economic status of women should influence the ideological outlook of resident women. In contrast to relative deprivation theory, but consistent with rising expectations theory, I argue that ideological disillusionment should peak in contexts in which women's earnings fall closely behind men, and that ideological optimism should rebound in contexts in which women's earnings have achieved parity with that of men. Utilizing pooled survey data, I find strong evidence that individual women's belief in the American Dream varies according to whether local women's relative earnings indicate confrontation with or breaking of the “glass ceiling.”

Her Support, His Support: Money, Masculinity, and Marital Infidelity

Recent years have seen great interest in the relationship between relative earnings and marital outcomes. Using data from the 1997 National Longitudinal Survey of Youth, I examine the effect of relative earnings on infidelity, a marital outcome that has received little attention. Theories of social exchange predict that the greater one’s relative income, the more likely one will be to engage in infidelity. Yet, emerging literature raises questions about the utility of gender-neutral exchange approaches, particularly when men are economically dependent and women are breadwinners. I find that, for men, breadwinning increases infidelity. For women, breadwinning decreases infidelity. I argue that by remaining faithful, breadwinning women neutralize their gender deviance and keep potentially strained relationships intact. I also find that, for both men and women, economic dependency is associated with a higher likelihood of engaging in infidelity; but, the influence of dependency on men’s infidelity is greater than the influence of dependency on women’s infidelity. For economically dependent persons, infidelity may be an attempt to restore relationship equity; however, for men, dependence may be particularly threatening. Infidelity may allow economically dependent men to engage in compensatory behavior while simultaneously distancing themselves from breadwinning spouses.

Stratified patterns of divorce

AbstractBACKGROUNDDespite evidence that divorce has become more prevalent among weaker socioeconomic groups, knowledge about the stratification aspects of divorce in Israel is lacking. Moreover, although scholarly debate recognizes the importance of stratificational positions with respect to divorce, less attention has been given to the interactions between them.OBJECTIVEOur aim is to examine the relationship between social inequality and divorce, focusing on how household income, education, employment stability, relative earnings, and the intersection between them affect the risk of divorce in Israel.METHODThe data is derived from combined census files for 1995-2008, annual administrative employment records from the National Insurance Institute and the Tax Authority, and data from the Civil Registry of Divorce. We used a series of discrete-time event-history analysis models for marital dissolution.RESULTSCouples in lower socioeconomic positions had a higher risk of divorce in Israel. Higher education in general, and homogamy in terms of higher education (both spouses have degrees) in particular, decreased the risk of divorce. The wife's relative earnings had a differential effect on the likelihood of divorce, depending on household income: a wife who outearned her husband increased the log odds of divorce more in the upper tertiles than in the lower tertile.CONCLUSIONSOur study shows that divorce indeed has a stratified pattern and that weaker socioeconomic groups experience the highest levels of divorce. Gender inequality within couples intersects with the household's economic and educational resources.1. IntroductionThis study examines relations between social inequality and divorce, focusing on how economic resources, education, and gender, and the intersection between them, affect the likelihood of divorce in Israel. Divorce studies over the last decade point to the ways partnership dissolution is part and parcel of the making and shaping of social inequality. In many countries, divorce is more prevalent among certain social groups (e.g., Amato 2010; Chan and Halpin 2005; Furtado, Marcen, and Sevilla 2013; Harkonen and Dronkers 2006; Hill 2004; Lewin 2006; Murphy 1985; Phillips and Sweeney 2006; Raz-Yurovich 2012). In some countries, research has shown a change in the social composition of divorce across time, as divorce has become more prevalent among weaker socioeconomic groups (Esping-Andersen 2009; Harkonen and Dronkers 2006).Although scholarly debate recognizes the importance of stratificational positions (e.g., class, education, ethnicity, relative earnings) with respect to divorce, one perspective deserves further inquiry - namely, intersectionality. This perspective suggests that social inequality is comprised of a mosaic of junctions between class, ethnicity, race and gender (Hooks 1986). For example, the influence of relative earnings on divorce has been found to vary by class (Kaplan and Stier 2012). Homogamy in social origins is a means of maintaining class cultures. Hence, its significance for divorce may change across classes, and can be especially important for the upper classes of a society (Maenpaa and Jalovaara 2014). Further, when examining interrelations between economic or educational resources and the tendency to divorce, we need to consider that each category is gendered. Thus, our premise is that inequality should be examined through a multifaceted lens.Another contribution of the current study is the use of updated data to examine the social composition of divorce in Israel. Although divorce rates have increased in the last three decades in Israel (ICBS 2013) and inequality has been rising in Israeli society since the mid-1980s (Swirski, Konor-Attias, and Ophir 2014), studies on divorce in general, and its relation to inequality in particular, are rare (for exceptions, see Lewin 2006; Raz-Yurovich 2012 - both of whom used data from the period up to the mid-1990s). …

Geology, Household Formation Rules and the Demand for Sons in Vietnam

This paper documents that individuals adapt cultural values to new economic environments. A natural experiment compares the causal impact of the sex of a woman's first-born child on fertility and under-5 mortality, across household types with historically different relative productivity of the sexes in agriculture. In Vietnam in 2002, the sex of the first-born was unrelated to urban or rural residence. Migration status was largely a result of Communist population and land use policies. Differences in results between rural and urban women show that relative earnings prospects of the sexes in current, not ancestral, locations determine sex preferences amongst parents.

Decisions under risk in a social and individual context: The limits of social preferences?

Social preference models were originally constructed to explain why people spend money to affect the earnings of others. These social preference theories are now widely used to model situations where decision makers do not influence the earnings of others, for example the labor market. Outcome-based social preference models make predictions in these settings as well. We therefore test these models in a novel experimental situation where participants face risky decisions that affect only their own earnings. In the social (individual) treatment participants do (not) observe the earnings of others. In the social treatment gambles therefore not only affect absolute but also relative earnings. All outcome-based social preference models predict a treatment difference. We find that decisions are generally the same in both treatments, which suggests these models are less general applicable than their formulation suggests.

Working while studying? Student aid design and socioeconomic achievement disparities in higher education

We analyze the relation between student academic achievement and labor supply by exploiting institutional variation derived from a Swedish public financial aid reform which altered the relative cost of financing college education through taking up student loans and engaging in market work, respectively. Applying detailed administrative data we estimate relative changes in earnings and academic credits attributed to the intervention for students from different social backgrounds. Results show that the reform increased relative earnings and decreased relative study pace for students from a lower socioeconomic background. These effects appear to have been driven by students more financially constrained by the previous system.

Early Life Environment and Racial Inequality in Education and Earnings in the United States

Chay, Guryan and Mazumder (2009) found substantial racial convergence in AFQT and NAEP scores across cohorts born in the 1960's and early 1970's that was concentrated among blacks in the South. We demonstrated a close tracking between variation in the test score convergence across states and racial convergence in measures of health and hospital access in the years immediately after birth. This study analyzes whether the across-cohort patterns in the black-white education and earnings gaps match those in early life health and test scores already established. It also addresses caveats in the earlier study, such as unobserved selection into taking the AFQT and potential discrepancies between state-of-birth and state-of-test taking. With Census data, we find: i) a significant narrowing across the same cohorts in education gaps driven primarily by a relative increase in the probability of blacks going to college; and ii) a similar convergence in relative earnings that is insensitive to adjustments for employment selection, as well as time and age effects that vary by race and state-of-residence. The variation in racial convergence across birth states matches the patterns in the earlier study. The magnitude of the earnings gains is greater than can be explained by only the black gains in education and test scores for reasonable estimates of the returns to human capital. This suggests that other pre-market, productivity factors also improved across successive cohorts of blacks born in the South between the early 1960's and early 1970's. Finally, our cohort-based hypothesis provides a cohesive explanation for the aggregate patterns in several, previously disconnected literatures.