an article by Olle Hammar and Daniel Waldenström published in VOX EU: CEPR’s Policy Portal
with grateful thanks to ResearchBuzz: Firehose
Abstract
Recent studies have analysed trends in global income inequality, but for most people in the world, labour earnings represent the vast majority of their income. This column uses a new global database on occupational earnings since 1970 to examine trends in earnings inequality between countries’ high- and low- earners, between countries, and between occupational groups. Global earnings inequality has fallen over the past half-century, and so has inequality within occupations, with main equalisation in the late 1990s and 2000s.
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Showing posts with label earnings_inequality. Show all posts
Showing posts with label earnings_inequality. Show all posts
Monday, 4 September 2017
Tuesday, 6 December 2016
Are changes in the dispersion of hours worked a cause of increased earnings inequality?
an article by Daniele Checchi (University of Milan; Irvapp-FBK and IZA), Cecilia García-Peñalosa (Aix-Marseille University and CESifo) and Lara Vivian (Aix-Marseille University) published in IZA Journal of European Labor Studies 2016 Volume 5 Article 15
Abstract
Earnings are the product of wages and hours of work; hence, the dispersion of hours can magnify or dampen a given distribution of wages. This paper examines how earnings inequality is affected by the dispersion of working hours using data for the USA, the UK, Germany, and France over the period 1989–2012.
We find that hours dispersion can account for over a third of earnings inequality in some countries and that its contribution has been growing over time.
We interpret the expansion in hours inequality in European countries as being the result of weaker union power that led to less successful bargaining concerning working hours.
JEL Classification D31 J22
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Abstract
Earnings are the product of wages and hours of work; hence, the dispersion of hours can magnify or dampen a given distribution of wages. This paper examines how earnings inequality is affected by the dispersion of working hours using data for the USA, the UK, Germany, and France over the period 1989–2012.
We find that hours dispersion can account for over a third of earnings inequality in some countries and that its contribution has been growing over time.
We interpret the expansion in hours inequality in European countries as being the result of weaker union power that led to less successful bargaining concerning working hours.
JEL Classification D31 J22
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Monday, 29 July 2013
Determinants of Household Earnings Inequality: The Role of Labour Market Trends and Changing Household Structure
Luxembourg Income Study (LIS) Working Paper Series No. 591 by Wen-Hao Chen, Michael Förster and Ana Llena-Nozal (Social Policy Division, OECD) published June 2013
Abstract
This article assesses various underlying driving factors for the evolution of household earnings inequality for 23 OECD countries from the mid-1980s to the mid-2000s.
There are a number of factors at play.
Some are related to labour market trends – increasing dispersion of individual wages and changes in men’s and women’s employment rates. Others relate to shifts in household structures and family formation – more single-headed households and increased earnings correlation among partners in couples. The contribution of each of these factors is estimated using a semi parametric decomposition technique.
The results reveal that marital sorting and household structure changes contributed, albeit moderately, to increasing household earnings inequality, while rising women’s employment exerted a sizable equalising effect.
However, changes in labour market factors, in particular increases in men’s earnings disparities, were identified as the main driver of household earnings inequality, contributing between one-third and one-half to the overall increase in most countries. Sensitivity analysis applying a reversed-order decomposition suggests that these results are robust.
JEL classification: D31, J12, J22, I30
Full text (PDF 41pp)
Abstract
This article assesses various underlying driving factors for the evolution of household earnings inequality for 23 OECD countries from the mid-1980s to the mid-2000s.
There are a number of factors at play.
Some are related to labour market trends – increasing dispersion of individual wages and changes in men’s and women’s employment rates. Others relate to shifts in household structures and family formation – more single-headed households and increased earnings correlation among partners in couples. The contribution of each of these factors is estimated using a semi parametric decomposition technique.
The results reveal that marital sorting and household structure changes contributed, albeit moderately, to increasing household earnings inequality, while rising women’s employment exerted a sizable equalising effect.
However, changes in labour market factors, in particular increases in men’s earnings disparities, were identified as the main driver of household earnings inequality, contributing between one-third and one-half to the overall increase in most countries. Sensitivity analysis applying a reversed-order decomposition suggests that these results are robust.
JEL classification: D31, J12, J22, I30
Full text (PDF 41pp)
Friday, 5 October 2012
Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation
an article by Fredrik Andersson (Office of the Comptroller of the Currency), Elizabeth E. Davis (University of Minnesota), Matthew L. Freedman (Cornell University), Julia I. Lane (American Institutes for Research, University of Strasbourg), Brian P. Mccall (University of Michigan) and 5, Kristin Sandusky (6U.S. Census Bureau) published in Industrial Relations: A Journal of Economy and Society Volume 51 Issue 4 (October 2012)
Abstract
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.
Abstract
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.
Monday, 10 September 2012
Accounting for changes in income inequality: Decomposition analyses for Great Britain, 1968-2009
a research paper (No. 2012-17) by Mike Brewer (Institute for Social and Economic Research, University of Essex and Institute for Fiscal Studies) and Liam Wren-Lewis (Overseas Development Institute Fellow and ECARES, Université Libre de Bruxelles) published by Institute for Social and Economic Research
Non-technical summary
It is widely known that household income inequality in the UK is much higher than it was thirty years ago. However, the rise over this period has not been even. Instead, on many measures income inequality rose very quickly during the 1980s, and has changed little since 1991. This is all the more puzzling given the fact that individual wage and earnings inequality rose fairly steadily over the period, at least until 2000. These patterns are different from the US, where income inequality has continued to rise along with earnings inequality. This article investigates these recent changes in income inequality, which have remained relatively understudied compared with changes in earnings or wage inequality. We address the question “why did income inequality rise very rapidly over the period 1978 to 1991 but then remain relatively flat thereafter?”
To answer these questions, we decompose changes in income inequality into the contributions from different factors. We first decompose income inequality according to the income sources which have contributed to changing inequality (earnings from employment, investment income, state benefits, etc): this allows us to assess the share of changes in total inequality attributable to each income source. We then focus on decomposing inequality according to household characteristics which we expect to influence income (such as age, education, sex, and so on).
We find that inequality in employment and self-employment income amongst the economically active grew both before and after 1991, but, since 1991, a number of factors have mitigated the effect of this on inequality in total income. First, inequality between those with different employment statuses has fallen since 1991, primarily due to a fall in the number of unemployed people. Second, employment taxes have played a larger role since 1991 in mitigating the increase in inequality of gross employment income than they did before 1991. Third, investment income has become less unequal since 1991, largely due to the decline in its importance, which itself may be explained by a fall in nominal interest rates. Finally, a rise in the relative incomes of pensioners and households with children under five has pulled inequality down. Overall, these four factors have almost entirely offset the impact of the rise in earnings and self-employment income inequality since 1991.
Full text (PDF 46pp)
Non-technical summary
It is widely known that household income inequality in the UK is much higher than it was thirty years ago. However, the rise over this period has not been even. Instead, on many measures income inequality rose very quickly during the 1980s, and has changed little since 1991. This is all the more puzzling given the fact that individual wage and earnings inequality rose fairly steadily over the period, at least until 2000. These patterns are different from the US, where income inequality has continued to rise along with earnings inequality. This article investigates these recent changes in income inequality, which have remained relatively understudied compared with changes in earnings or wage inequality. We address the question “why did income inequality rise very rapidly over the period 1978 to 1991 but then remain relatively flat thereafter?”
To answer these questions, we decompose changes in income inequality into the contributions from different factors. We first decompose income inequality according to the income sources which have contributed to changing inequality (earnings from employment, investment income, state benefits, etc): this allows us to assess the share of changes in total inequality attributable to each income source. We then focus on decomposing inequality according to household characteristics which we expect to influence income (such as age, education, sex, and so on).
We find that inequality in employment and self-employment income amongst the economically active grew both before and after 1991, but, since 1991, a number of factors have mitigated the effect of this on inequality in total income. First, inequality between those with different employment statuses has fallen since 1991, primarily due to a fall in the number of unemployed people. Second, employment taxes have played a larger role since 1991 in mitigating the increase in inequality of gross employment income than they did before 1991. Third, investment income has become less unequal since 1991, largely due to the decline in its importance, which itself may be explained by a fall in nominal interest rates. Finally, a rise in the relative incomes of pensioners and households with children under five has pulled inequality down. Overall, these four factors have almost entirely offset the impact of the rise in earnings and self-employment income inequality since 1991.
Full text (PDF 46pp)
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