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A decomposition of labor earnings growth: Recovering Gaussianity?

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  • Pora, Pierre
  • Wilner, Lionel

Abstract

Recent works have concluded that labor earnings dynamics exhibit non-Gaussian and nonlinear features. We argue in this paper that this finding is mainly due to volatility in working time. Using a non-parametric approach, we find from French data that changes in labor earnings exhibit strong asymmetry and high peakedness. However, after decomposing labor earnings growth into growth in wages and working time, deviations from Gaussianity stem from changes in working time. The nonlinearity of earnings dynamics is also mostly driven by working time dynamics at the extensive margin.

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  • Pora, Pierre & Wilner, Lionel, 2020. "A decomposition of labor earnings growth: Recovering Gaussianity?," Labour Economics, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:labeco:v:63:y:2020:i:c:s0927537120300130
    DOI: 10.1016/j.labeco.2020.101807
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    3. Francis Kramarz & Elio Nimier‐David & Thomas Delemotte, 2022. "Inequality and earnings dynamics in France: National policies and local consequences," Quantitative Economics, Econometric Society, vol. 13(4), pages 1527-1591, November.
    4. Magnac, Thierry & Roux, Sébastien, 2021. "Heterogeneity and wage inequalities over the life cycle," European Economic Review, Elsevier, vol. 134(C).

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    More about this item

    Keywords

    Labor earnings growth; Non-Gaussian distributions; Skewness; Kurtosis; Nonlinear earnings dynamics;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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