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Hours Worked and the U.S. Distribution of Real Annual Earnings 1976-2019

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  • Iv'an Fern'andez-Val
  • Franco Peracchi
  • Aico van Vuuren
  • Francis Vella

Abstract

We examine the impact of annual hours worked on annual earnings by decomposing changes in the real annual earnings distribution into composition, structural and hours effects. We do so via a nonseparable simultaneous model of hours, wages and earnings. Using the Current Population Survey for the survey years 1976--2019, we find that changes in the female distribution of annual hours of work are important in explaining movements in inequality in female annual earnings. This captures the substantial changes in their employment behavior over this period. Movements in the male hours distribution only affect the lower part of their earnings distribution and reflect the sensitivity of these workers' annual hours of work to cyclical factors.

Suggested Citation

  • Iv'an Fern'andez-Val & Franco Peracchi & Aico van Vuuren & Francis Vella, 2020. "Hours Worked and the U.S. Distribution of Real Annual Earnings 1976-2019," Papers 2002.11211, arXiv.org, revised Nov 2021.
    • Handle: RePEc:arx:papers:2002.11211
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    References listed on IDEAS

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    1. Alexander Bick & Adam Blandin & Richard Rogerson, 2022. "Hours and Wages," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(3), pages 1901-1962.
    2. Peter Gottschalk & Sheldon Danziger, 2005. "Inequality Of Wage Rates, Earnings And Family Income In The United States, 1975–2002," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(2), pages 231-254, June.
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    4. Lillard, Lee & Smith, James P & Welch, Finis, 1986. "What Do We Really Know about Wages? The Importance of Nonreporting and Census Imputation," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 489-506, June.
    5. Daniele Checchi & Cecilia García-Peñalosa & Lara Vivian, 2016. "Are changes in the dispersion of hours worked a cause of increased earnings inequality?," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-34, December.
    6. David H. Autor & Alan Manning & Christopher L. Smith, 2016. "The Contribution of the Minimum Wage to US Wage Inequality over Three Decades: A Reassessment," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 58-99, January.
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