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Earnings inequality and skill mismatch in the U.S.: 1973-2002

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  • Slonimczyk, Fabian

Abstract

This paper shows that skill mismatch is a significant source of inequality in real earnings in the U.S. and that a substantial fraction of the increase in wage dispersion during the period 1973-2002 was due to the increase in mismatch rates and mismatch premia. In 2000-2002 surplus and deficit qualifications taken together accounted for 4.3 and 4.6 percent of the variance of log earnings, or around 15 percent of the total explained variance. The dramatic increase in over-education rates and premia accounts for around 20 and 48 percent of the increase in the Gini coefficient during the 30 years under analysis for males and females respectively. The surplus qualification factor is important in understanding why earnings inequality polarized in the last decades.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 35449.

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Date of creation: 2011
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Handle: RePEc:pra:mprapa:35449

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Keywords: Skill Mismatch; Earnings Inequality; Shapley Value Decomposition;

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Cited by:
  1. Slonimczyk, Fabián & Skott, Peter, 2012. "Employment and distribution effects of the minimum wage," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 84(1), pages 245-264.
  2. Salverda, Wiemer & Checchi, Daniele, 2014. "Labour-Market Institutions and the Dispersion of Wage Earnings," IZA Discussion Papers 8220, Institute for the Study of Labor (IZA).

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