Gender, Price, and Quantity Effects in U.S. Earnings Inequality: Revisiting Counterfactual Density Estimates

Economics Bulletin, Forthcoming

17 Pages Posted: 28 Oct 2020

See all articles by Andrew Silva

Andrew Silva

The Gender Center, The Graduate Institute of International and Development Studies

Date Written: March 16, 2020

Abstract

I decompose changes in the U.S. household earnings distribution from 1975 to 2018 to examine the labor market processes underlying its evolution over time. I model the distri- bution of earnings as a function of price effects (wages) and quantity effects (work hours and household employment), each of which are specified separately for men and women, and apply a semi-parametric density estimation technique to infer their contributions to in- equality measures over time. Results indicate that changes to the male wage distribution explain much of the growth in earnings inequality, but that its contribution varied greatly over time, with peak contributions in the mid 1990s; while changes in female work hours have actually mitigated inequality growth, particularly by raising earnings in the lower and mid portions of the distribution, with very consistent effects over time. These results demonstrate the relevance of work hours in addition to wage rates in explaining earnings inequality, and the importance of gender differences therein.

Keywords: gender, income, wages, inequality, decomposition

JEL Classification: D31, J31, R11

Suggested Citation

Silva, Andrew, Gender, Price, and Quantity Effects in U.S. Earnings Inequality: Revisiting Counterfactual Density Estimates (March 16, 2020). Economics Bulletin, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3688933 or http://dx.doi.org/10.2139/ssrn.3688933

Andrew Silva (Contact Author)

The Gender Center, The Graduate Institute of International and Development Studies ( email )

PO Box 136
Geneva, CH-1211
Switzerland

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