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A nonparametric analysis of the U.S. earnings distribution

  • D. K. Ginther
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    This paper examines the change in the earnings distribution and in the earnings distribution conditional on years of schooling and experience for white male full-time, year-round workers in the United States from 1967 to 1992. Ginther uses nonparametric kernel estimators to examine changes in the unconditional and conditional earnings distributions and to estimate measures of conditional earnings inequality. Ginther compares estimates from parametric wage equations to nonparametric estimates and finds that parametric estimates are biased: earnings inequality did not change in equal proportions within cohorts and experience groups. Instead, inequality increased the most among workers with 10 and 12 years of schooling at all experience levels and among workers with both 16 years of schooling and less than 15 years experience. Inequality decreased among people with graduate levels of schooling. Controlled for levels of schooling and experience, real wages have declined drastically for all workers except those with more than 16 years of schooling or more than 25 years experience. Groups experiencing the largest increase in earnings inequality are also those with the largest decline in real wages.

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    File URL: http://www.irp.wisc.edu/publications/dps/pdfs/dp106795.pdf
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    Paper provided by University of Wisconsin Institute for Research on Poverty in its series Institute for Research on Poverty Discussion Papers with number 1067-95.

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    Handle: RePEc:wop:wispod:1067-95
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    1. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-44, September.
    2. Murphy, Kevin M & Welch, Finis, 1992. "The Structure of Wages," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 285-326, February.
    3. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    4. Deaton, Angus, 1989. "Rice Prices and Income Distribution in Thailand: A Non-parametric Analysis," Economic Journal, Royal Economic Society, vol. 99(395), pages 1-37, Supplemen.
    5. repec:aei:rpbook:52907 is not listed on IDEAS
    6. Claudia Goldin & Robert A. Margo, 1991. "The Great Compression: The Wage Structure in the United States at Mid- Century," NBER Working Papers 3817, National Bureau of Economic Research, Inc.
    7. HÄRDLE, Wolfgang, 1992. "Applied nonparametric methods," CORE Discussion Papers 1992003, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. Pudney, Stephen, 1993. "Income and Wealth Inequality and the Life Cycle: A Non-parametric Analysis for China," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(3), pages 249-76, July-Sept.
    9. Robert H. Haveman & Lawrence Buron, 1999. "The Anatomy of Changing Male Earnings Inequality: An Empirical Exploration of Determinants," Macroeconomics 9906018, EconWPA.
    10. 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.
    11. Oliver LINTON, . "Applied nonparametric methods," Statistic und Oekonometrie 9312, Humboldt Universitaet Berlin.
    12. 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.
    13. 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 410-42, June.
    14. Härdle,Wolfgang, 1992. "Applied Nonparametric Regression," Cambridge Books, Cambridge University Press, number 9780521429504.
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