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Hours Worked and the U.S. Distribution of Real Annual Earnings 1976–2016

Author

Listed:
  • Fernández-Val, Iván

    (Boston University)

  • Peracchi, Franco

    (University of Rome Tor Vergata)

  • van Vuuren, Aico

    (University of Groningen)

  • Vella, Francis

    (Georgetown University)

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. We provide identification results and estimators of the objects required for the decompositions. Using the Current Population Survey for the survey years 1976–2016, we find that changes in the level 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. The impact of hours on males' earnings inequality operates only through the lower part of the earnings distribution and reflects the sensitivity of these workers' annual hours of work to cyclical factors.

Suggested Citation

  • Fernández-Val, Iván & Peracchi, Franco & van Vuuren, Aico & Vella, Francis, 2020. "Hours Worked and the U.S. Distribution of Real Annual Earnings 1976–2016," IZA Discussion Papers 13016, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp13016
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    References listed on IDEAS

    as
    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. Guido W. Imbens & Whitney K. Newey, 2009. "Identification and Estimation of Triangular Simultaneous Equations Models Without Additivity," Econometrica, Econometric Society, vol. 77(5), pages 1481-1512, September.
    3. 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.
    4. 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.
    5. Thomas Lemieux, 2006. "Increasing Residual Wage Inequality: Composition Effects, Noisy Data, or Rising Demand for Skill?," American Economic Review, American Economic Association, vol. 96(3), pages 461-498, June.
    6. 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.
    7. 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.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    earnings inequality; sample selection; decompositions; nonseparable model;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J00 - Labor and Demographic Economics - - General - - - General

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