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A Longitudinal Analysis of Within-Education-Group Earnings Inequality

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  • Gustavsson, Magnus

    () (Department of Economics)

Abstract

Using a large Swedish longitudinal database for the period 1982–2005, I estimate and compare within-group inequality in persistent and transitory earnings among men with high-school and college degrees. Analyses of inequality over the life cycle reveal that experience-variance profiles of persistent earnings are very similar across the two education groups and also consistent with standard human capital models of on-the-job training. Transitory earnings shocks display a marked U-shaped variance pattern over the life-cycle for both groups, but are clearly larger for high-school graduates and also account for a larger proportion of their overall variance. Analyses of changes in within-group inequality over time, holding life-cycle effects constant, show that high-school and college graduates have been subject to similar trend growths in both persistent and transitory earnings differentials between 1982 and 2005.

Suggested Citation

  • Gustavsson, Magnus, 2008. "A Longitudinal Analysis of Within-Education-Group Earnings Inequality," Working Paper Series 2008:14, Uppsala University, Department of Economics.
  • Handle: RePEc:hhs:uunewp:2008_014
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    Keywords

    Permanent inequality; Earnings instability; Life-cycle earnings; Schooling;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J39 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Other

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