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Accounting for earnings inequality in a diverse work force

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  • Mark E. Schweitzer

Abstract

A general decomposition of earnings inequality is applied to the complete full-time labor force, including minorities and women. The results confirm that education premiums were the largest observable factor in the rise in earnings inequality in the 1980s, and also reveal an offsetting reduction in the role of race- and sex-related earnings differences.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Cleveland in its series Working Paper with number 9314.

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Date of creation: 1993
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Handle: RePEc:fip:fedcwp:9314

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Keywords: Education ; Income distribution ; Labor supply;

References

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  1. Heckman, James & Scheinkman, Jose, 1987. "The Importance of Bundling in a Gorman-Lancaster Model of Earnings," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 54(2), pages 243-55, April.
  2. McKinley L. Blackburn & David E. Bloom, 1987. "The Effects of Technological Change on Earnings and Income Inequality inthe United States," NBER Working Papers 2337, National Bureau of Economic Research, Inc.
  3. Randall W. Eberts, 1989. "Accounting for the recent divergence in regional wage differentials," Economic Review, Federal Reserve Bank of Cleveland, Federal Reserve Bank of Cleveland, issue Q III, pages 14-26.
  4. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
  5. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(3), pages 410-42, June.
  6. Murphy, Kevin M & Welch, Finis, 1992. "The Structure of Wages," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(1), pages 285-326, February.
  7. Fuchs, Victor R, 1989. "Women's Quest for Economic Equality," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 3(1), pages 25-41, Winter.
  8. Walter Y. Oi, 1962. "Labor as a Quasi-Fixed Factor," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 70, pages 538.
  9. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, Econometric Society, vol. 50(1), pages 193-211, January.
  10. Smith, James P & Ward, Michael, 1989. "Women in the Labor Market and in the Family," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 3(1), pages 9-23, Winter.
  11. O'Neill, June, 1990. "The Role of Human Capital in Earnings Differences between Black and White Men," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 4(4), pages 25-45, Fall.
  12. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 66, pages 281.
  13. Smith, James P & Welch, Finis, 1979. "Inequality: Race Differences in the Distribution of Earnings," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(2), pages 515-26, June.
  14. Richard B. Freeman, 1991. "How Much Has De-Unionisation Contributed to the Rise in Male Earnings Inequality?," NBER Working Papers 3826, National Bureau of Economic Research, Inc.
  15. Welch, Finis, 1990. "The Employment of Black Men," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 8(1), pages S26-74, January.
  16. Creedy, John, 1977. "The Principle of Transfers and the Variance of Logarithms," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 39(2), pages 153-58, May.
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Cited by:
  1. Randall W. Eberts & Mark E. Schweitzer, 1994. "Regional wage convergence and divergence: adjusting wages for cost-of- living differences," Economic Review, Federal Reserve Bank of Cleveland, Federal Reserve Bank of Cleveland, issue Q II, pages 26-37.

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