Within-group Wage Inequality Research Articles

Quantile regression, Box-Cox transformation model, and the U.S. wage structure, 1963–1987

This study examines changes in the increments (‘returns’) to education and experience at different points of the wage distribution. It also examines changes in within-group wage inequality. Newly developed quantile regression techniques are applied to the Box-Cox transformation model using the Current Population Survey data. The increments differ, but they changed in similar pattern at different points of the wage distribution. They are larger at the low end of the distribution for the less skilled workers, and larger at the high end for the more skilled workers. Wage inequality increased differentially for all skill groups. These increases result mainly from a longer tail at the lower end of the wage distributions.

Changes in the U.S. Wage Structure 1963-1987: Application of Quantile Regression

The 1980's witnessed rapid changes in the structure of wages in the United States. In this study, recently developed techniques for quantile regression are applied to every March Current Population Survey since 1964 and changes in the return to schooling and experience at different points of the wage distribution are examined. The quantile regression technique parsimoniously describes the entire conditional wage distribution. This conditional distribution is used to examine changes in within-group wage inequality as measured by the difference between conditional quantiles. Two linear models are considered: a simple one-group model, and a 16-group model. The results suggest that the returns to schooling and experience differ across quantiles of the wage distribution but their patterns of change are similar. Significant differences in wage inequality are also found across the various skill groups. The paper also presents a new imputation method for CPS data.