Changing income inequality: A distributional paradigm for Canada

This paper examines the major changes in income inequality in Canada since the 1970s and collects them as a distributional paradigm for Canada. It focuses on labour market changes in terms of shares of workers and earnings shares for lower earners, middle‐class workers and higher earners in a flexible general framework. Polarization of full‐time workers, loss of middle‐class earnings share and increase in a higher earnings gap are highlighted. Changing returns to human capital, role of demographics and cohort effects and declining labour share are examined. The paper also reviews evidence of changing economic mobility and estimating the role of inequality of opportunity.     

INTERGENERATIONAL INCOME MOBILITY IN SWEDEN: WHAT DO TAX‐DATA SHOW?

The aim of this paper is to investigate intergenerational income mobility in Sweden by means of a representative sample drawn from tax-data files. Longitudinal data on actual parent-child pairs spanning 1978–92 are employed. Regression and correlation coefficients are analyzed and transition matrices calculated in order to investigate income mobility over generations. The results achieved show high intergenerational income mobility in Sweden between fathers and sons in comparison to estimations performed in most other countries and more especially compared to the U.S. This indicates that Sweden does not only have lower cross-sectional income inequality, but also higher intergenerational income mobility than those countries. The mother's earnings influence children's earnings less than the father's. However, the mother's earnings correlate more strongly with a daughter's earnings than they do with that of a son. The major indication of immobility across generations is found in the upper income deciles.     

Earnings mobility in Spain: the role of job mobility and contractual arrangements

This paper analyses the relationship between earnings mobility, job mobility and changes in the contractual arrangement in Spain using a sample of Spanish workers aged 16–60 years extracted from the European Community Household Panel Survey (ECHP 1995–2001). Overall, earnings mobility remains mostly unchanged over time, although clear differences, both in terms of levels and trends, can be perceived among different types of workers. Results show that, in general, job mobility contributes to increase earnings mobility. Switching into permanent contract are associated with the highest probability of upgrading among those workers who remain with the same employer. In contrast, the highest risk of downgrading among stayers appears when changing from permanent to temporary. An analysis on low pay/no low pay transitions reveals that job mobility always increases the probability of moving from low pay to better-paid jobs among females. For males, in contrast, this occurs only when they were initially employed on a temporary basis. Furthermore, for females it is found that either switching into permanent contract while staying with the same employer, or changing employer while being employed on a permanent basis yield a higher chance of upgrading than staying with the same employer with a permanent contract.      

The Role of Mobility in Offsetting Inequality: A Nonparametric Exploration of the CPS

This paper explores how annual earnings mobility offsets annual earnings inequality, using matched CPS data. Mobility in the economy is estimated using nonparametric quantile regression, for which we adapt state–of–the–art smoothing techniques. Mobility is measured through the churning process (changes in earnings given initial earnings) in order to identify different mobility patterns for different earnings groups. For instance, upward mobility in high earners is far weaker than its converse, downward mobility for low earners. We assess the (positive or negative) contribution to offsetting of each pattern in mobility. Innovations in our approach also allow us to identify trends and minute changes in mobility, and to pinpoint which changes in mobility have offset the increases in inequality observed over the decades.     

Is Mobility in the United States Still Alive? Tracking career opportunities and income growth

Longitudinal data are used to compute income and earnings mobility in the 1970s and 1980s. The various strengths and weakness of different perspectives on mobility are assessed, with the change in real income or earnings being chosen as the one that most closely resembles the common-sense meaning of progress or decline. Care is taken to choose the proper age ranges and to define quantiles on the basis of 10-year income or earnings. Based on the Panel Study on Income Dynamics, this paper finds the share of family income losers among prime-age adults rose from 21% in the 1970s to 33% in the 1980s. This jump is reflected in a corresponding jump in the share of male earners with declining earnings over the same time period. Female earners, however, worked 44% more in the 1980s than the 1970s and fewer were on declining earnings paths. In terms of sub-populations, lower income and less educated groups had larger increases of income and earnings losses.     

Progressive Taxation and Wage Setting: Some Evidence for Denmark

The proposition that a progressive tax system contributes to wage moderation is studied using Danish earnings data disaggregated by occupation, gender and earnings level. Our main conclusions are that income-tax progression affects wage setting, but whether it moderates or exaggerates wage pressure is income dependent. An increase in progressivity reduces the pre-tax earnings of middle-income workers (manual male workers and moderate income earners among both male and female non-manual workers). The reverse is found for high-income earners (non-manual male workers), in that an increase in progressivity tends to raise pre-tax earnings. Finally, there is no significant effect of tax progressivity on the wages of low-income earners.
JEL classification : H 3; J 3; J 5; J 6     

Self-Employment and Wage Earning in Hungary

This paper examines the earnings determinants of the self‐employed and wage earners in Hungary in the mid‐1990s, taking into account two forms of selection: selection into working or non‐working for every individual in its sample and selection into self‐employment or wage‐earning jobs for workers only. Previous studies use switching regression to examine the returns to individual characteristics, taking into account only selection into self‐employment or wage‐earning jobs. The authors find that the estimated returns to individual characteristics when accounting for both forms of selection, differ from estimates correcting for only selection into self‐employment or wage‐earning jobs. They also find that the earnings determinants of the two sectors are not significantly different from each other.     

What caused earnings inequality to increase in Canada during the 1980s?

While broad consensus exists that earnings inequality increasedin Canada during the 1980s, as in other industrialised countries,there is little agreement about the causes. The main contributionof this paper is the simultaneous, empirical examination ofeight hypotheses of increased earnings inequality, using multivariateregression analysis, namely: the decline in unionisation, minimumwages and industrialisation, as well as the increase in unemployment,trade, relative supply of university-educated workers and relativesupply of female workers, and technological change. In Canada,during the 1980s, employment and unionisation factors stronglyand consistently explain the increase in annual earnings andhourly wage-rate inequality, after controlling for six otherpossible determinants. The results also point to the importanceof considering a multidimensional explanation of increased earningsinequality and avoiding generalisations across gender, incomeand work status groups.     

Returns to skills around the world: Evidence from PIAAC

Existing estimates of the labor-market returns to human capital give a distorted picture of the role of skills across different economies. International comparisons of earnings analyses rely almost exclusively on school attainment measures of human capital, and evidence incorporating direct measures of cognitive skills is mostly restricted to early-career workers in the United States. Analysis of the new PIAAC survey of adult skills over the full lifecycle in 23 countries shows that the focus on early-career earnings leads to underestimating the lifetime returns to skills by about one quarter. On average, a one-standard-deviation increase in numeracy skills is associated with an 18 percent wage increase among prime-age workers. But this masks considerable heterogeneity across countries. Eight countries, including all Nordic countries, have returns between 12 and 15 percent, while six are above 21 percent with the largest return being 28 percent in the United States. Estimates are remarkably robust to different earnings and skill measures, additional controls, and various subgroups. Instrumental-variable models that use skill variation stemming from school attainment, parental education, or compulsory-schooling laws provide even higher estimates. Intriguingly, returns to skills are systematically lower in countries with higher union density, stricter employment protection, and larger public-sector shares.     

Earnings Instability and Tenure

We study the effect of tenure on earnings instability in Italy using the reforms of temporary employment contracts, which affected the average tenure of workers differentially across cohorts. We develop a model of earnings dynamics, and we exploit the variation of tenure and instability over time and across birth cohorts to estimate policy‐relevant parameters. Our results indicate that each year of tenure on the job reduces earnings instability by 11 percent; the drop is faster in the first three years of the match. Workers on a temporary contract have an earnings instability up to 100 percent higher than workers on a permanent contract.     

Sources of earnings inequality: Estimates from an on-the-job search model of the US labor market

Since the early 1980s the labor market in the United States has seen a substantial increase in earnings dispersion. We study the issue by developing an on-the-job search model of the US labor market that allows for wage and employment mobility as a result of optimal individual behavior. We estimate its structural parameters on PSID data at different points in time to clarify the sources of the evolution of earnings inequality and instability between 1987 and 1996. This procedure allows to: compute lifetime measure of inequality on top of the usual cross-sectional measure of inequality and provide counterfactual experiments that evaluate the contribution of different parameters to changes over time by taking into account some equilibrium effects. We find that the increase in lifetime inequality and in cross-sectional inequality have been generated by different sources and that these sources are different by skills: changes in the wage offer distribution are the main determinant of the increase in inequality for skilled workers while both mobility changes and wage offer distribution changes are needed to explain changes for the unskilled.     

Increasing dispersion of skills and rising earnings inequality

In recent decades many countries have simultaneously liberalized their trading regimes and expanded their education systems. The theoretical effect of these regime shifts on the wage differential between skilled and unskilled workers is ambiguous. On the one hand, openness to trade causes demand shifts in the labor market which may widen or narrow the differential. This result depends on whether the unskilled wage is depressed, as in the case of importing countries, or raised, as in the case of exporting countries. On the other hand, an increased supply of more educated workers reduces their wages and narrows the skill wage gap. In this study of the labor market of Hong Kong, we document that recent changes in response to the trade liberalization of Mainland China and expanded access to education have increased the earnings differential between skilled and unskilled workers. Using detailed census data, we argue that the main reason for this outcome is the widened dispersion of skills across the earnings distribution, resulting from demand and supply shifts in the labor market caused by trade openness and expanded access to higher education.     

Do volatile firms pay volatile earnings? Evidence from linked worker-firm data

Despite the importance of earnings instability, little is known about its correlates or causes. This article seeks to better understand earnings instability by studying whether volatile firms pay volatile earnings and is the first to directly test the relationship using US linked employer–employee data. The article finds a positive and statistically significant relationship using within-firm variation. In addition, this article finds that lower earning workers are passed significantly more volatility from their employing firms than are higher earning workers.     

GLOBAL AND DISAGGREGATED MEASURES OF EARNINGS MOBILITY: EVIDENCE FROM FIVE EUROPEAN COUNTRIES

This paper offers the first application of the local approximation method pioneered by Schluter and Trede (2003) for the Shorrocks mobility indices across the earnings distribution for a range of European Countries covering the main European social models: Denmark, Germany, Spain, the UK and Italy in the pre‐accession EU (1994‐2001). This insightful approach allows us to offer a global and disaggregate analysis of mobility as proportionate change in inequality and hence provide the reader with a full set of information to make his/her own judgment about the extent of mobility and country ranking. Specifically, we investigate the degree to which mobility is driven by low or high earners and how this picture changes across three different earnings measures: full‐time full‐year working, adding part‐time working and then part‐year working. Our results draw out some general key facts. First of all the vast bulk of the measured mobility occurs in the tails especially the lower tail with at least half of the index driven by mobility in the bottom earning quintile. Second, in the top 20 percent of the distribution there are few movements of earnings that effect the level of permanent inequality except in Denmark. Third, no country has a clear dominance for mobility across the full earnings distribution but Denmark differs from the other countries with clearly greater mobility in the middle and at the top. Finally, we find that with the exception of Denmark and Italy, mobility does not lead to clear convergence to the mean but rather to points around 0.7‐0.8 and 1.5 to 2 times the mean.     

A New Look at Intergenerational Mobility in Germany Compared to the U.S

Motivated by contradictory evidence on intergenerational mobility in Germany, I present a cross‐country comparison of Germany and the U.S., reassessing the question of whether intergenerational mobility is higher in Germany than in the U.S. I can reproduce the standard result from the literature, which states that the German intergenerational elasticity estimates are lower than those for the U.S. However, based on highly comparable data, even a reasonable degree of variation in the sampling rules leads to similar estimates in both countries. I find no evidence for non‐linearities along the fathers' earnings distribution. In contrast, the analysis shows that mobility is higher for the sons at the lowest quartile of the sons' earnings distribution in both countries. In Germany this result is mainly driven by a high downward mobility of sons with fathers in the upper middle part of the earnings distribution. The corresponding pattern is clearly less pronounced in the U.S.     

Assimilation to a Welfare State: Labor Market Performance and Use of Social Benefits by Immigrants to Finland*

This paper documents the economic performance of immigrants in a country characterized by an extensive welfare state and a short immigration history. Upon arrival, immigrants to Finland have substantially lower employment rates than comparable natives. While they experience rapid employment growth, only men from OECD countries catch up with natives. Despite the persisting employment and earnings differences between non‐OECD immigrants and natives, the differences in income transfers disappear in roughly 20 years. The immigrant–native employment gaps are larger in Finland than in Australia, Canada, or the US.     

Child Labour's effect on long-run earnings: An analysis of cohorts

The effect of child labour on wages in adulthood is conceptually ambiguous. Children who work learn responsibility and work-ethic, increasing adult earnings. However, working children have less time for play and homework, hindering cognitive development, resulting in lower earnings. The limited existing empirical work is similarly confounding. This paper assesses the nexus between child labour and adult earnings using unique data from an Ecuadorian 2015 labour market survey. It applies novel instrumental variable regression techniques that account for earnings, education and child labour being jointly determined. The sample is divided into age cohorts (20s, 30s, 40s and 50+) to ascertain the long-run consequences of child employment at different stages of life. The results suggest that former child (and teenage) workers earn significantly less per hour. The analysis of cohorts reveals that the effect is stronger for older workers. This gives impetus to the hypothesis that child work hinders cognitive development, which becomes more evident when workers reach full maturity. The study concludes with policy recommendations.     

Motherhood and women's earnings in Anglo-American,Continental European,and Nordic Countries

Abstract

The earnings of mothers make up an important, but difficult to quantify, component of parental expenditures on children. This paper compares the long-term earnings of women with children, women without children, and men. The study conducts separate analyses for less educated, moderately educated, and highly educated people in eight Anglo-American, Continental European, and Nordic countries. The study finds that, for the most part, these countries cluster into three groups, with mothers in the Continental European group experiencing the largest earnings differentials, mothers in the Nordic group experiencing the smallest, and mothers in the Anglo-American countries occupying the middle position.     

HOW MISLEADING ARE INCOME DISTRIBUTIONS?

Starting from the proposition that economic welfare is better measured by the capitalized value of expected future income at age 18 than by income at a point of time, the present paper explores the bias introduced in comparison of earnings and income distributions.
The earning distribution chosen for study is that for males in 1959 in the United States. It is shown that earnings distributions are biased and therfore can be considered highly misleading in most comparisons unless the comparison involves two groups with identical age distributions and identical distributions of earnings over the working life of earners.
Further, a most striking effect can be discerned in comparing the earnings to the present value distributions by educational level. As one moves up the educational ladder, the within-group distribution of lifetime income becomes more and more equal, in sharp contrast to the findings for the distribution of earnings at a point in time.
The result are sufficiently interesting and striking to warrant further studies of distributions of present value of lifetime expected earnings (and income).     

中国上市公司盈余管理的频率与幅度

盈余管理频率和幅度是投资者保护程度在现实经济中的具体体现。然而,已有文献在盈余管理频率或者幅度方面所提供的证据还远远不足以揭示客观事实。本文运用所有研究样本的报告盈余信息,通过假设报告盈余服从混合正态分布,运用参数估计的方法对阈值处的盈余管理频率和幅度进行推断。研究结论表明,中国上市公司从1995年至2003年间都存在为避免报告亏损而进行的盈余管理。1996年、1997年以及2001年至2003年的盈余管理频率和幅度较高,并且2001年至2003年逐年呈上升趋势。2001年至2003年平均有64·4%的亏损公司在阈值0点上进行盈余管理并达到避免报告亏损的目的,平均盈余管理幅度为提高ROA数据0·065。研究还发现2001年至2003年期间的盈余管理更加具有隐蔽性。