In this paper we develop a methodology that allows us to quantify the effect of changes in unemployment rates on labor income inequality. We estimate individual earnings functions for employed people conditional on a working status polychotomous model and we establish a formal procedure to assign wages to unemployed workers. We simulate the probability distribution of unemployed persons of particular year on a base year.
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Paper provided by Princeton, Woodrow Wilson School - Development Studies in its series Papers with number
193.
Length: 35 pages Date of creation: 2000 Date of revision: Handle: RePEc:fth:priwds:193
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Find related papers by JEL classification: C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
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