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Labor Earnings Mobility and Inequality in the United States and Germany During the Growth Years of the 1980s

  • Richard V. Burkhauser
  • Douglas Holtz-Eakin
  • Stephen E. Rhody

Recent years have witnessed increased interest in issues of inequality and mobility in the labor market. Using data from the Panel Study of Income Dynamics and the German Socio-Economic Panel, we compare the labor earnings mobility of prime age men and women in the United States and Germany during the growth years of the 1980s. Despite major differences in labor market institutions we find very similar patterns in the two countries. Our formal models of labor earnings dynamics suggest a great deal of persistence in both countries. In the United States this may derive from permanent individual-specific differences among men, while in Germany random shocks are found to persist longer for men. Women in Germany and the United States have similar earnings dynamics.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5988.

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Date of creation: Apr 1997
Date of revision:
Publication status: published as Burkhauser, Richard V., Douglas Holtz-Eakin and Stephen E. Rhody. "Labor Earnings Mobility And Inequality In The Untied States And Germany During The Growth Years Of The 1980s," International Economic Review, 1997, v38(4,Nov), 775-794.
Handle: RePEc:nbr:nberwo:5988
Note: LS
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  1. 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.
  2. Richard V. Burkhauser & John G. Poupore, 1997. "A Cross-National Comparison Of Permanent Inequality In The United States And Germany," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 10-17, February.
  3. 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.
  4. Peter Gottschalk & Robert Moffitt, 1994. "The Growth of Earnings Instability in the U.S. Labor Market," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(2), pages 217-272.
  5. Susan N. Houseman & Katharine G. Abraham, 1995. "Earnings Inequality in Germany," Book chapters authored by Upjohn Institute researchers, in: Richard B. Freeman & Lawrence F. Katz (ed.), Differences and Changes in Wage Structures, pages 371-403 W.E. Upjohn Institute for Employment Research.
  6. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
  7. Katharine G. Abraham & Susan N. Houseman, 1993. "Job Security in America: Lessons from Germany," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number kagsnh1993, April.
  8. Lee A. Lillard & Robert J. Willis, 1976. "Dynamic Aspects of Earnings Mobility," NBER Working Papers 0150, National Bureau of Economic Research, Inc.
  9. Katharine G. Abraham & Susan N. Houseman, 1993. "Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France, and Belgium," NBER Working Papers 4390, National Bureau of Economic Research, Inc.
  10. Gottschalk, Peter, 1993. "Changes in Inequality of Family Income in Seven Industrialized Countries," American Economic Review, American Economic Association, vol. 83(2), pages 136-42, May.
  11. 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 1333-81, September.
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