The rise in lifetime earnings inequality among men
Recent trends in lifetime earnings inequality in the United States have been barely explored, despite the fact that lifetime earnings are a better measure of access to resources than the more widely studied annual earnings. This paper demonstrates that lifetime earnings inequality has increased over the past 30 years. We first explore how starting wages and wage growth have changed over time and link the changes to trends in lifetime earnings and the lifetime skill-premium. We then calculated a broader measure of lifetime earnings inequality and show that since the late 1960s, lifetime earnings inequality has increased by a third. Between the late 1960s and mid-1970s a rise in within-education-group inequality more than accounts for the increase; since then the growth in between-education-group inequality accounted for a majority of the rise. These results are consonant with the data on starting wages and wage growth. Finally, we show that the increase in inequality has been largely driven by greater dispersion in hourly wages, although declining hours of work among low-education young men did play a role. The analysis uses data from the March Current Population Survey as well as matched CPS data. Thus we demonstrate how repeated cross-sections and short panels of data can be used to examine issues usually reserved for long panels.
|Date of creation:||2002|
|Contact details of provider:|| Postal: 20th Street and Constitution Avenue, NW, Washington, DC 20551|
Web page: http://www.federalreserve.gov/
More information through EDIRC
|Order Information:||Web: http://www.federalreserve.gov/pubs/feds/fedsorder.html|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fichtenbaum, Rudy & Shahidi, Hushang, 1988. "Truncation Bias and the Measurement of Income Inequality," Journal of Business & Economic Statistics, American Statistical Association, vol. 6(3), pages 335-337, July.
- Donald O. Parsons, 1978. "The Autocorrelation of Earnings, Human Wealth Inequality, and Income Contingent Loans," The Quarterly Journal of Economics, Oxford University Press, vol. 92(4), pages 551-569.
- Murphy, Kevin M & Welch, Finis, 1990. "Empirical Age-Earnings Profiles," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 202-229, April.
- Hungerford, Thomas L, 1993. "U.S. Income Mobility in the Seventies and Eighties," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(4), pages 403-417, December.
- Moshe Buchinsky & Jennifer Hunt, 1999.
"Wage Mobility In The United States,"
The Review of Economics and Statistics,
MIT Press, vol. 81(3), pages 351-368, August.
- Moshe Buchinsky & Jennifer Hunt, 1996. "Wage Mobility in the United States," NBER Working Papers 5455, National Bureau of Economic Research, Inc.
- Lillard, Lee A, 1977. "Inequality: Earnings vs. Human Wealth," American Economic Review, American Economic Association, vol. 67(2), pages 42-53, March.
- Lee A. Lillard, 1975. "Inequality: Earnings vs. Human Wealth," NBER Working Papers 0080, National Bureau of Economic Research, Inc.
- MaCurdy, Thomas E., 1982. "The use of time series processes to model the error structure of earnings in a longitudinal data analysis," Journal of Econometrics, Elsevier, vol. 18(1), pages 83-114, January.
- Francine D. Blau & Lawrence M. Kahn & Jane Waldfogel, 2000. "Understanding Young Women's Marriage Decisions: The Role of Labor and Marriage Market Conditions," ILR Review, Cornell University, ILR School, vol. 53(4), pages 624-647, July.
- Francine D. Blau & Lawrence M. Kahn & Jane Waldfogel, 2000. "Understanding Young Women's Marriage Decisions: The Role of Labor and Marriage Market Conditions," NBER Working Papers 7510, National Bureau of Economic Research, Inc.
- George J. Borjas & Richard B. Friedman & Lawrence F. Katz, 1997. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 1-90.
- Creedy, J., 1995. "Lifetime Versus Annual Income Distribution," Department of Economics - Working Papers Series 478, The University of Melbourne.
- Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December.
- 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 1333-1381, September.
- 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 410-442, June.
- Welch, Finis, 1997. "Wages and Participation," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 77-103, January.
- Bishop, John A & Chiou, Jong-Rong & Formby, John P, 1994. "Truncation Bias and the Ordinal Evaluation of Income Inequality," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(1), pages 123-127, January.
- Abowd, John M & Card, David, 1989. "On the Covariance Structure of Earnings and Hours Changes," Econometrica, Econometric Society, vol. 57(2), pages 411-445, March.
- John M. Abowd & David Card, 1986. "On the Covariance Structure of Earnings and Hours Changes," NBER Working Papers 1832, National Bureau of Economic Research, Inc.
- John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1.
- Robert G. Wood, 1995. "Marriage Rates and Marriageable Men: A Test of the Wilson Hypothesis," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 163-193. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:fip:fedgfe:2002-21. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Franz Osorio)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.