Note: The author wishes to thank James Davies, Gary Fields, Ira Gang, the participants in seminars at University of Munich, IZA, and the Southern Economic Association (2001) and two anonymous referees. Special thanks to the editors, Bart van Ark and Stephan Klasen, who provided encouragement and showed great patience. Part of the work was done while the author visited the Department of Economics, Rutgers University.
EARNINGS INEQUALITY IN USA, 1969–99: COMPARING INEQUALITY USING EARNINGS EQUATIONS
Version of Record online: 24 FEB 2006
Review of Income and Wealth
Volume 52, Issue 1, pages 127–144, March 2006
How to Cite
Yun, M.-S. (2006), EARNINGS INEQUALITY IN USA, 1969–99: COMPARING INEQUALITY USING EARNINGS EQUATIONS. Review of Income and Wealth, 52: 127–144. doi: 10.1111/j.1475-4991.2006.00179.x
- Issue online: 24 FEB 2006
- Version of Record online: 24 FEB 2006
A simple decomposition method using an earnings equation is proposed by synthesizing two decomposition methodologies, those of Juhn, Murphy, and Pierce (1993) and Fields (2003), in order to study changes in earnings inequality in America during the last three decades in the 20th century. The proposed method enables us to compute both aggregate and detailed decompositions of changes in earnings inequality. The decomposition of earnings inequality change during the last three decades in 20th century shows that the increase in earnings inequality in America was caused by changes in the wage structure and the distribution of unobservables. The premium to education contributes substantially to the widening of earnings inequality during the 1980s and 1990s. A decreasing male wage premium contributes to leveling earnings inequality.