THE GROWTH OF FAMILY EARNINGS INEQUALITY IN CANADA, 1980–2005

In this study we document recent trends in family earnings inequality using data from the Canadian Census and provide insight into the various factors that drive changes in the family earnings distribution. Over the period 1980–95 we observe substantial increases in family earnings inequality. In contrast, we find that some decrease in inequality occurred over the period 1995–2005 although the earnings of the richest 1 percent of families increased substantially. We use semi‐parametric decomposition methods to show that increases in the employment rates of men and women, increases in their educational attainment, and decreases in assortative mating tended to have equalizing effects on the family earnings distribution. We also show that increases in the returns to higher education and increases in the proportion of single individuals as well as lone‐parent families drove increases in family earnings inequality.     

An Investigation into the Positive Effect of an Educated Wife on Her Husband’s Earnings: The Case of Japan in the Period between 2000 and 2003

We analyze the effect of a wife??s human capital on her husband??s earnings, using individual-level data for Japan in the period 2000?C2003. We find a positive association between a wife??s education and her husband??s earnings, which can be attributed to the assortative mating effect as well as the positive effect of an educated wife on her husband??s productivity. We divide the sample into those couples with non-working wives and those with working wives, and also employ an estimation strategy proposed by Jepsen (Review of Economics of the Household 3:197?C214, 2005), attempting to control for the assortative mating effect. Our regression analysis provides suggestive evidence that educated wives increase their husbands?? productivity and earnings only when they are non-workers and have sufficient time to support their husbands.     

INEQUALITY OF OPPORTUNITY IN BRAZIL

This paper proposes a measure of the contribution of unequal opportunities to earnings inequality. Drawing on the distinction between "circumstance" and "effort" variables in John Roemer's work on equality of opportunity, we associate inequality of opportunities with five observed circumstances which lie beyond the control of the individual—father's and mother's education; father's occupation; race; and region of birth. The paper provides a range of estimates of the importance of these opportunity-forming circumstances in accounting for earnings inequality in one of the world's most unequal countries. We also decompose the effect of opportunities into a direct effect on earnings and an indirect component, which works through the "effort" variables. The decomposition is applied to the distribution of male earnings in urban Brazil, in 1996. The five observed circumstances are found to account for between 10 and 37 percent of the Theil index, depending on cohort and allowing for the possibility of biased coefficient estimates due to unobserved correlates. On average, 60 percent of this impact operates through the direct effect on earnings. Parental education is the most important circumstance affecting earnings, but the occupation of the father and race also play a role.     

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.     

Assessing the Equalizing Force of Mobility Using Short Panels: France, 1990–2000

In this paper, we document whether and how much the equalizing force of earnings mobility has changed in France in the 1990's. For this purpose, we use a representative three-year panel, the French Labour Force Survey. We develop a model of earnings dynamics that combines a flexible specification of marginal earnings distributions (to fit the large cross-sectional dimension of the data) with a tight parametric representation of the dynamics (adapted to the short time-series dimension). Log earnings are modelled as the sum of a deterministic component, an individual fixed effect and a transitory component which is assumed first-order Markov. The transition probability of the transitory component is modelled as a one-parameter Plackett copula. We estimate this model using a sequential expectation-maximization algorithm.
We exploit the estimated model to study employment/earnings inequality in France over the 1990–2002 period. We show that, in phase with business-cycle fluctuations (a recession in 1993 and two peaks in 1990 and 2000), earnings mobility decreases when cross-section inequality and unemployment risk increase. We simulate individual earnings trajectories and compute present values of lifetime earnings for various horizons. Inequality presents a hump-shaped evolution over the period, with a 9% increase between 1990 and 1995 and a decrease afterwards. Accounting for unemployment yields an increase of 11%. Moreover, this increase is persistent, as it translates into a 12% increase in the variance of log present values. The ratio of inequality in present values to inequality in one-year earnings, a natural measure of immobility or of the persistence of inequality, remains remarkably constant over the business cycle.     

Changes in the structure of earnings during the Polish transition

We document changes in the structure of earnings during the economic transition in Poland. We find that inequality in labor earnings increased substantially from 1988 to 1996. A common view is that the reallocation of workers from a public sector with a compressed wage distribution, to a private sector with much higher wage inequality, accounts for the bulk of increased earnings inequality during transition (see, e.g., the models of Aghion and Commander (1999) [Aghion, Philippe, Commander, Simon, 1999. On the dynamics of inequality in the transition. Economics of Transition 7, 275–2898.] and Commander and Tolstopiatenko (1998) [Commander, Simon, Tolstopiatenko, Andrei, 1998. The role of unemployment and restructuring in the transition. In: Commander, Simon (Ed.), Enterprise Restructuring and Unemployment in Models of Transition. The World Bank, Washington, pp. 169–192.]). However, our decomposition of the sources of the increase in inequality suggests that this compositional effect accounts for only 39% of the increase. Fully 52% of the increase is due to the increase in the variance of wages within sectors. That is, earnings inequality within both the private and public sectors grew substantially, and by similar amounts. This is consistent with prior work suggesting that even state-owned enterprises in Poland moved towards competitive wage setting as they restructured (see, e.g., Pinto et al. (1993) [Pinto, Brian, Belka, Marek, Krajewski, Stefan, 1993. Transforming state enterprises in Poland: evidence on adjustment by manufacturing firms. Brookings papers on Economic Activity, 213-70.] Commander and Dhar (1998) [Commander, Simon, Dhar, Sumana, 1998. Enterprises in the Polish transition. In Simon Commander (Ed.), Enterprise Restructuring and Unemployment in Models of Transition. The World Bank, Washington, pp. 109-142.]).A substantial part of the increase in earnings inequality was between group, due largely to increased education premiums. However, changes in inequality within education–experience–gender groups account for about 60 percent of the increase in overall earnings inequality. The increases in within-group inequality were very different across skill groups, with much larger increases for highly educated workers. These patterns hold in both the private and public sectors, although increases in education premiums were somewhat greater in the private sector.     

EARNINGS INEQUALITY, LABOUR SUPPLY AND SCHOOLING IN HUSBAND–WIFE FAMILIES

This paper describes the association between market work and earnings inequality across families over the life cycle and over calendar time with special attention to the different experiences of college‐educated and high‐school‐educated people. A concise and effective accounting framework is developed that allows for an assessment of the effect of the growing market employment of married women on family earnings inequality. Applying this framework to pseudo‐panel data from successive Current Population Surveys indicates that the increase in wives' employment has diminished the growth in family earnings inequality especially for well‐educated couples. Inferences about the level and change in earnings inequality depend on the degree of labor market attachment of the people studied especially in the case of wives.     

The Effect of Labor's Bargaining Power on Wealth Inequality in the UK,USA, And France

This paper analyses the determinants of wealth inequality, measured as the share of wealth owned by the top 1 percent wealthiest individuals. We find that labor's bargaining power is a significant and important determinant of top wealth shares. Using a semi-structural vector autoregression (SVAR) model for the period 1970–2019, we estimate that shocks to labor's bargaining power explain 32 percent, 8 percent and 32 percent of the variation around the long-term trend in wealth inequality in the UK, USA and France, respectively.     

Earnings Inequality in Germany and Its Implications

The current paper discusses the evolution of earnings inequality in Germany with an eye to its potential lessons for China. Inequality is assessed from two different perspectives: the distribution of annual earnings, and the distribution of lifetime earnings. This paper proposes to implement closer monitoring of lifetime earnings and take a proactive stance in the formation of the wage-bargaining regime.     

Can fiscal redistribution undo skill-biased technical change?: Evidence from the French experience

The inequality of labor earnings among working-age individuals has gone up in all western countries during the past 25 years, either through rising wage inequality (US, UK) or through rising unemployment (Continental Europe). Policy regimes did matter a great deal, however, as far as the inequality of disposable income is concerned. In a country like France, transfers to the unemployed were sufficiently massive to prevent income inequality from rising. This paper argues that the way fiscal redistribution has managed to counteract skill-biased technical change in countries like France is somewhat paradoxical. The same distributive stability could have been obtained at a lower cost by following a job subsidies strategy rather than an income maintenance strategy, simply because it is always less costly to have people at work producing something. We explore several potential explanations for this paradox.     

Assortative mating in the online market for sperm donation

Previous studies on assortative mating have struggled to isolate preferences from actual constraints faced throughout the matching process, including the geographic and social propinquity that limit the availability of possible mates. Because such passive factors restrict the possibility set of potential partners, they may either restrict the chance of fulfilling mating preferences or lead to a high level of positive assortative mating. The possibility set may be further reduced by competition in the mating market. It is also unclear from couple’s data how much assortative mating is driven by partner selection to reduce anticipated child rearing problem and how much by a desire for parental assistance and altruistic preferences for offspring. Adopting the online market for sperm donation as the research setting reduces such problems: the more controlled setting ensures isolation of a male’s genetic impact on his offspring from other factors. By identifying the factors that influence the symmetry of characteristics between recipients and partners and recipients and donors chosen, we provide empirical evidence that even with limited constraints on available choice, women still exhibit homogamous donor preferences. Likewise, by exploring how potential donors’ characteristics match partner characteristics, we offer insights into what drives recipients’ desires to find donors who surpass both their own and their partners’ characteristics.     

INEQUALITY OF OPPORTUNITY IN EARNINGS AND CONSUMPTION EXPENDITURE: THE CASE OF INDIAN MEN

The paper associates inequality of opportunities with outcome differences that can be accounted by predetermined circumstances which lie beyond the control of an individual, such as parental education, parental occupation, caste, religion, and place of birth. The non‐parametric estimates using parental education as a measure of circumstances reveal that the opportunity share of earnings inequality in 2004–05 was 11–19 percent for urban India and 5–8 percent for rural India. The same figures for consumption expenditure inequality are 10–19 percent for urban India and 5–9 percent for rural India. The overall opportunity share estimates (parametric) of earnings inequality due to circumstances, including caste, religion, region, parental education, and parental occupation, vary from 18 to 26 percent for urban India, and from 16 to 21 percent for rural India. The overall opportunity share estimates for consumption expenditure inequality are close to the earnings inequality figures for both urban and rural areas. The analysis further finds evidence that the parental education specific opportunity share of overall earnings (and consumption expenditure) inequality is largest in urban India, but caste and geographical region also play an equally important role when rural India is considered.     

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.     

INEQUALITY OF WAGE RATES,EARNINGS AND FAMILY INCOME IN THE UNITED STATES, 1975–2002

This paper analyzes distributional changes over the last quarter of the twentieth century. We focus on four distinct distributions: the distribution of hourly wage rates, the distribution of annual earnings of individuals, the distribution of annual earnings of families, and the distribution of total family income adjusted for family size. Both male wage rate inequality and family income inequality accelerated during the early 1980s, increased at a slower rate through the early 1990s and then stabilized at a high level through the early 2000s. The similarity in the timing of changes in these two distributions has been used as evidence that increased family income inequality primarily reflects increased inequality of wage rates. We show that other important factors were also at work.     

The changing role of education in the distribution of earnings and household income

This article draws on income surveys from the last two decades to report on trends in earnings disparities and household income inequality in the Czech Republic. Education has been the main axis of change in this area, having acquired a much greater role in the entire process of collecting and distributing income. First, an increasing influence of education is evident in the personal earnings of employees, returns to education having doubled. Second, in couples, education has an important impact on both women’s employment and their earnings. Third, the importance of marital partners’ education levels on household income grew even more than its effect on earnings.     

Deprivation of Women and Men Living in a Couple: Sharing or Unequal Division?

In standard poverty analyses, all household members are assumed to share equal living conditions. Though a few national studies exist, this paper is the first to present empirical evidence on this issue for the EU, using the 2015 wave of the EU Statistics on Income and Living Conditions. We map the extent of intra-couple inequality in deprivation, and analyze its determinants. We find that for most items, the gender difference in lack between partners, though generally small, is significant and at the disadvantage of women. When aggregating the individual items into a deprivation scale, couples where the number of enforced lacks is higher for the woman (9.2 percent) are (significantly) more numerous than couples where the man is disadvantaged (6.5 percent), at the EU level. Econometric analysis shows that the work status of the partners and their relative contribution to the joint income are important determinants of the intra-couple gender deprivation gap.     

Income inequality between overlapping and stratification: a longitudinal analysis of personal earnings in France and Italy

The aim of this paper is to gain new insights into the generation process of personal income in France and Italy, two countries that are in close geographical proximity but have a large disparity in terms of income growth and distribution. In the first step, the potential of EU-SILC balanced panel (2004–2007) is exploited by random effects models, which also make it possible to explore the primary factors that are likely to explain differences in generating personal labour earnings. In the second step, the ANOGI (Analysis of Gini) decomposition enables one to assess the contribution of each sub-population to overall income inequality and the degree to which each subgroup is stratified. A joint evaluation of income determinants gives evidence of the high complexity of inequality process and throws light on the role of gender, skill levels and job characteristics in determining different degrees of income stratification. Indeed, although the high heterogeneity among members of a same subgroup (within-group inequality) explains a large share of overall income inequality, the between-group inequality becomes significant in explaining the income differentials between employment status and occupation types.     

Factor Components of Inequality: A Cross‐Country Study

This paper uses data from the Luxembourg Income Study to examine some of the forces that have driven changes in household income inequality over the last three decades of the twentieth century. We decompose inequality for six countries (Canada, Germany, Norway, Sweden, the U.K., and the U.S.) into the three sources of market income (earnings, property income, and income from self‐employment) and taxes and transfers. Our findings indicate that although changes in the distribution of earnings are an important force behind recent trends, they are not the only one. Greater earnings dispersion has in some cases been accompanied by a reduction in the share of earnings which dampened its impact on overall household income inequality. In some countries the contribution of self‐employment income to inequality has been on the rise, while in others, increases in inequality in capital income account for a substantial fraction of the observed distributional changes.     

An empirical analysis of assortative mating in India and the U.S.

This paper uses a conditional logit model to analyze empirically how individuals sort themselves through marriage into households in India and the U.S. The results support positive assortative mating of spouses with respect to age and schooling. We find no evidence in favor of Becker's theory of labor market specialization in couples. Moreover, while similarity in age is the strongest predictor of marital choice in India, education of a prospective spouse plays a more important role in the U.S. Finally, we find that while dowry increases the likelihood of women marrying men with characteristics dissimilar to their own, availability of a mate has a positive effect on the degree of stratification in India.     

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.