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The Role Of Wage Differences And Individual Labour Supply On Male Earnings Inequality: Empirical Evidence From Spain

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  • Laura Crespo

    ()
    (Universidad de Alicante)

Abstract

This paper studies the link between wage differences and individual earnings inequality for a sample of Spanish continuously working males from the European Community Household Panel for the period from 1994 to 1998. We analyse and quantify the contribution of two labour market features that could affect this link: the role of permanent and transitory wage inequality, and the existence of a significant response in individuals¿ hours of work to shifts in their own wage rates. Based on Hyslop (2001), we propose a particular specification for wages and earnings that incorporates an intertemporal labour supply model and we obtain predictions on wage and earnings inequality using a covariance structure framework. En este trabajo se analiza la relación entre las diferencias salariales y la desigualdad en rentas laborales individuales para una muestra de hombres empleados de forma continua en España en el período comprendido entre 1994 y 1998 procedente del Panel de Hogares de la Unión Europea (PHOGUE). En concreto, se analiza y cuantifica la contribución de dos aspectos del mercado laboral que pueden afectar a dicha relación o transmisión: el papel de la desigualdad salarial permanente o transitoria, y la existencia de respuestas significativas de las horas de trabajo de los individuos a variaciones en sus propios salarios. Basándonos en Hyslop (2001), se propone una especificación particular para los salarios y las rentas laborales que incorpora un modelo de oferta de trabajo intertemporal. A través de la estimación de dicho modelo, se obtienen predicciones de la desigualdad salarial y la desigualdad en rentas laborales utilizando un enfoque de estructura de covarianza.

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Bibliographic Info

Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie EC with number 2007-05.

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Length: 32 pages
Date of creation: Jul 2007
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasec:2007-05

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Keywords: Desigualdad salarial; desigualdad en rentas laborales; oferta de trabajo individual; modelo de estructura de covarianza Wage inequality; individual earnings inequality; individual labour supply; covariance structure model.;

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  1. Joseph G. Altonji & Lewis M. Segal, 1994. "Small Sample Bias in GMM Estimation of Covariance Structures," NBER Technical Working Papers 0156, National Bureau of Economic Research, Inc.
  2. K. Newey, Whitney, 1985. "Generalized method of moments specification testing," Journal of Econometrics, Elsevier, vol. 29(3), pages 229-256, September.
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  5. Abowd, John M & Card, David, 1989. "On the Covariance Structure of Earnings and Hours Changes," Econometrica, Econometric Society, vol. 57(2), pages 411-45, March.
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  10. 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, vol. 101(3), pages 410-42, June.
  11. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
  12. Kajal Lahiri, 2005. "Analysis of Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 1093-1095.
  13. Richard B. Freeman, 1994. "Working Under Different Rules," NBER Books, National Bureau of Economic Research, Inc, number free94-1.
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  15. Peter Gottschalk & Robert Moffitt, 1994. "The Growth of Earnings Instability in the U.S. Labor Market," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(2), pages 217-272.
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