OCCUPATIONAL GROWTH AND THE EXPANSION OF EDUCATIONALLY-RELATED EARNING GAPS

I develop an argument that facilitates understanding of how occupational growth impinges on the relationship between education and earnings. Much of the literature focuses on workers employed at the ends of the occupational hierarchy, whereas my contribution applies to workers positioned all along the occupational hierarchy. I argue that an undersupply of affordable, suitable labor in expanding occupations encourages a division of labor among workers who vary in educational attainment. This division of labor, in turn, leads to greater educationally-related earnings inequality—even among workers who hold similar positions in the occupational hierarchy. Such a development can become pervasive because expanding occupations exist throughout the occupational hierarchy and because educational attainment among workers varies within most occupations. In declining occupations, a different set of conditions pervades, and these conditions facilitate employers' efforts to control their wage-bill by compressing educationally-related earning gaps. A hypothesis is derived from these arguments and tested on a nationally representative sample. The findings are consistent with the hypothesis, suggesting the arguments considered here help explain how the relationship between education and earnings is influenced by whether workers are employed in expanding or in declining occupations. Consequently, this research improves our understanding of how earnings inequality among individuals is linked to structural transformations in the economy.     

Women’s Earnings Before and After Marital Dissolution: Evidence from Longitudinal Earnings Records Matched to Survey Data

This paper investigates the change in women’s earnings following marital dissolution from a longitudinal approach. Using unique data that matches the Survey of Income and Program Participation (SIPP) with Social Security longitudinal earnings records, we examine marital dissolution events occurring between 1985 and 2003. Results show significant increases in women’s labor market involvement and earnings following marital dissolutions over the past two decades. We find greater labor force involvement prior to the dissolution event among more recent divorcees; however, among those already in the labor force, the pattern of change in earnings associated with divorce has changed little over the examined period. Human capital and family characteristics were associated with the change in earnings after marital dissolution.     

The returns to seniority in academic labor markets

Although earnings and seniority are believed positively related in most labor markets, the earnings of academics were thought to be an exception to this rule. Using the National Survey of Postsecondary Faculty, from 1993, we find that earnings and seniority are positively related once adequate controls for past labor market mobility are included among the regressors. In particular, we find that individuals who are currently tenured at their initial job have the steepest seniority profile of any group we examined. We also find a handsome premium paid to individuals who are hired-with-tenure. These results suggest a market characterized by competitive “raiding” of top faculty.     

Die wahrgenommene Gerechtigkeit des eigenen Erwerbseinkommens: Geschlechtstypische Muster und die Bedeutung des Haushaltskontextes

The rise in female labor market participation and the growth of ??atypical?? employment arrangements has, over the last few decades, brought about a steadily decreasing percentage of households in which the man is the sole breadwinner, and a rising percentage of dual-earner households. Against this backdrop, the paper investigates how household contexts in which the traditional ??male breadwinner?? model still exists or has already been challenged affect individuals?? subjective evaluations of the justice of their personal earnings. In the first step we derive three criteria used by individuals to evaluate the fairness or justice of their personal earnings: compensation for services rendered, coverage of basic needs, and the opportunity to earn social approval. In the second step, we apply considerations from household economics and new approaches from gender research to explain why men??s and women??s evaluations of justice are determined to a considerable degree by the specific situation within their household. The assumptions derived regarding gender-specific patterns in justice attitudes are then tested on data from the German Socio-Economic Panel Study (SOEP) from 2007 and 2005. The results support our central thesis that gender-specific patterns in the evaluation of personal earnings are both reduced and increased in dual-earner households. They are reduced because women in dual-income households tend to have higher income expectations that challenge the existing gender wage gap. At the same time, gender-specific patterns are increased because men evaluate the equity of their personal income in relation to their ability to fulfill traditional gender norms and thus their capacity to live up to corresponding notions of ??masculinity.??     

Identification of the covariance structure of earnings using the GMM estimator

In recent years there has been a rapid growth in the number of studies that have used the GMM estimator to decompose the earnings covariance structure into its permanent and transitory parts. Using a heterogeneous growth model of earnings, we consider the performance of the estimator in this context. We use Monte Carlo simulations to examine the sensitivity of parameter identification to key features such as panel length, sample size, the degree of persistence of earnings shocks and the specification of the earnings model. We show that long panels allow the identification of the model, even when persistence in transitory shocks is high. Short panels, on the other hand, are insufficient to identify individual parameters of the model even with moderate levels of persistence.     

THE DECOMPOSITION OF INEQUALITY BY CLASS AND BY OCCUPATION:

Sociological research on earnings and income has focused on predicting individual income. Analyses most often use occupational status or class, along with other economically relevant variables, to explain earnings or income variations among individuals (income determination). Aggregate inequality (income distribution) has received considerably less attention, except in cross-national research. This especially holds for applying central concepts of stratification to the analysis of inequality. That is, class and occupation differences in economic rewards are rarely used to investigate aggregate earnings or income inequality. This study, using 1976 and 1977 Panel Study of Income Dynamics survey data, estimates the proportion of total earnings/income inequality accounted for by class and by occupation. Theil's index is used to measure earnings and income inequality and thus decompose total inequality into between-and within-group components. Wright's five-category schema is replicated for decomposition of inequality by class and a traditional four-category ordinal typology for decomposition by occupation. The two schemas show similar results: both class and occupation respectively account for between one-fifth and one-fourth of total earnings and income inequality. The results show the relevance of these central stratification typologies for the analysis of aggregate inequality.     

Decreasing the Recent Immigrant Earnings Gap: The Impact of Canadian Credential Attainment

It is well documented that newly arrived immigrants face a significant earnings gap relative to native‐born workers. One way for new immigrants to improve their relative labour market position upon arrival in a host country is to improve their educational credentials. According to signalling theory, a host‐country credential should provide employers with a proxy for true productivity on the job, leading to higher earnings. Using data from a Canadian longitudinal survey, we employ longitudinal growth‐curve techniques to estimate the effect of receiving a Canadian educational credential on the income growth of racial‐minority recent immigrants compared to native‐born Canadians. The results indicate that the earnings gap between recent immigrants and native‐born Canadians is significantly reduced with the attainment of a Canadian educational credential.     

Occupational Advantage and the Impact of College Rank on Labor Market Outcomes*

Most analyses of the effects of college rank on labor market outcomes focus on its average impact across sub-populations and employment situations. The framework adopted in this paper, however, suggests that the effects of college rank may vary by individual characteristics and type of job. Using data from the 1973 Occupational Changes in a Generation Survey, we test three hypotheses suggesting that occupational advantage, as measured either by family of origin or current position, is a significant determinant of capacity to convert increments in college prestige into labor market success. The findings suggest that where one went to college is especially consequential for (1) the occupational status of individuals from professional families; (2) the earnings of individuals from both professional and managerial families; and (3) the earnings of individuals in both professional and managerial positions. Overall, these findings tend to confirm the study's underlying hypothesis that aggregate analyses of college rank may be misleading when applied across sub-populations and employment situations.     

Will They Ever Converge? Earnings of Immigrant and Canadian-born Workers over the Last Two Decades1

Using Census data covering the 1980–2000 period, this article examines what outcomes would be necessary for today's recent immigrant cohorts to achieve earnings parity with Canadian‐born workers. Our results show that today's recent immigrants would have to experience a drastic steepening of their relative age‐earnings profile in the near future for their earnings to converge with their Canadian‐born counterparts. The reason is simple: the greater relative earnings growth experienced by recent immigrant cohorts has only partially offset the drastic deterioration in their relative earnings at entry.     

(When) Is job-finding via personal contacts a meaningful concept for social network analysis? A comment to

Chua (2011) argues that in a meritocratic context, institutions restrict the usefulness of social networks in exerting influence on job seekers’ earnings. Regressing job-finding via personal contacts on earnings, he finds negative effects of influence via personal contacts, especially for the well-educated and individuals working in the state sector. In this comment, I argue that these results are ambiguous because (1) the analysis does not sufficiently distinguish between job ‘search’ methods and job ‘finding’ methods, (2) job-finding method indicates information flow rather than a personal contact's influence, and (3) it remains unclear whether Chua's analysis reflects the effect of network usage in job search per se or the effect of self-selection into network usage by individuals with low earning potential.     

USING THE PARETO DISTRIBUTION TO IMPROVE ESTIMATES OF TOPCODED EARNINGS

Inconsistent censoring in the public‐use March Current Population Survey (CPS) limits its usefulness in measuring labor earnings trends, as previous approaches for imputing topcoded earnings systematically understate top earnings. Using Pareto estimation methods with less‐censored internal data, we create an enhanced cell‐mean series to capture top earnings in the public‐use data. Annual earnings inequality trends since 1963 using our series largely mirror those found by Kopczuk, Saez, and Song using social security administration data for commerce and industry workers. When we extend our analysis to 2013 and consider all workers, earnings inequality levels are higher but its growth is more modest. (JEL C81, D31, J01)     

Examining the impact of alternative power measures on individual time use in American and Danish couple households

We exploit time diary data for couple households in Denmark and the United States to examine the impact alternative measures of intrahousehold bargaining power have upon different measures of individual time use. Power measures have traditionally been based on current earnings, but earnings are determined by past/present time use decisions and hence potentially endogenous. More powerful individuals have been hypothesized to spend less time on housework, however, housework time also depends upon relative preferences for home produced goods and relative productivity in home production. Gendered notions of time use and censored earnings and time data also pose problems. We propose examining leisure time and exploring alternative measures of power less prone to endogeneity bias in order to address these theoretical and empirical concerns. Our results indicate that leisure time is more consistently and significantly associated with ‘power’ than housework time and that education share performs quite well as a measure of power. These results are particularly strong on non-work days and in the United States.     

Returns vs. Endowments in the Earnings Attainment Process for Metropolitan and Nonmetropolitan Men and Women1

Abstract Three explanations typically are offered for differences in earnings: (1) individuals have different levels of human capital and hold different jobs (endowments differ), (2) rewards to human capital and job characteristics differ (returns differ), and (3) some combination of differences in endowments and returns explain variations in earnings. We argue that the structure of labor markets in nonmetropolitan (nonmetro) areas differs from that in metropolitan (metro) areas such that returns, as well as endowments, vary. These variations in returns favor metropolitan workers, explaining the predominant portion of the metro/nonmetro earnings gap. We examine the earnings differences for metro and nonmetro men and women in both 1977 and 1987, showing that returns outweigh endowments in explaining that gap for both men and women, although their importance decreases over the ten-year period. Research to improve our understanding of how differences in labor market structure produce differential returns has begun and may yield yet another avenue for action for policymakers interested in reducing metro/nonmetro inequalities.     

Improving the Measurement of the Relationship between Opportunities and Income: Evidence from Longitudinal Data from Chile

The relationship between exogenous circumstances faced in early childhood (opportunities) and earnings has been increasingly studied in the past decade. In this article we assess the sensitivity of this relationship to different income measures. Typically the empirical evidence is based on short‐term income measures that suffer from variability and measurement error. Using longitudinal data from Chile, we find that when four‐ and seven‐year earnings are used, the relationship between inequality of opportunity and income inequality is significantly higher than that obtained with yearly measures. Monte Carlo simulations with several data‐generating processes confirm this result. This supports policies targeted to reduce long‐term income inequality via providing equal opportunity to individuals at early stages in life.     

What Makes an Entrepreneur and Does it Pay? Native Men,Turks, and Other Migrants in Germany

This paper focuses on the entrepreneurial endeavours of immigrants' and natives in Germany, concentrating on Turks, Germany's largest immigrant group and one under‐studied in the literature. Self‐employed Turks in Germany represent about 70 per cent of all Turkish entrepreneurs in the European Union. We use data from the German Socio‐economic Panel to study patterns of self‐employment. First, we identify the characteristics of the self‐employed individuals and understand their underlying drive into self‐employment. Next we investigate how immigrant entrepreneurs fare in the labour market and compare their earnings to those of the natives. It is important for decision makers to understand entrepreneurial patterns so that they can shape policy that better fosters entrepreneurial activities. This paper presents several findings that can inform better policymaking. First, our investigation indicates that education is not decisive in determining whether one will choose self‐employment over salaried work nor in explaining earnings. The estimated age‐earnings profiles are the same for natives and immigrants, while the proclivity to become self‐employed is concave with respect to age for both groups. Immigrants' start with a higher probability to work than natives but have a slower increase in the self‐employment probabilities thereafter. The earnings of self‐employed immigrants' are higher initially, but their earnings path crosses eventually that of the natives. Second, we find some suggestion of ethnic entrepreneurial spirit. Turks are 70 per cent more likely to be self‐employed than any other immigrant group, although they do not necessarily earn more. These patterns should be further explored.     

Why women earn less than men in self-employment

Data from a sample of 659 selfemployed individuals are used to evaluate explanations for the large earnings differential between selfemployed men and women. A signifi-cant portion of the differential is attributed to differences in the industrial distribution of businesses and to the differential effects of housework and family responsibilites on the earnings of males and females. Differences due to industry position are traced to the lower proportions of women in the relatively rewarding areas of construction and professional practice and their greater representation in the relatively unrewarding personal services sector. Women in selfemployment appear to be burdened by house-work and childrearing in ways that limit the scope of their selfemployed businesses and the intensity of work effort in them. If selfemployed women were to have their total hours of labor redistributed between market work and house work in the same man-ner as men, their selfemployed earnings would be substantially increased. A portion of the differential is traceable to differences in financial capital (femalerun business have smaller capital stocks) and differences in specific human capital (female self-employed have less experience in running their business).     

A longitudinal evaluation of government-sponsored job skills training and basic employment services among U.S. baby boomers with economic disadvantages

Job skills training is a cost-effective strategy for improving employment among individuals who have low income and employment barriers, but few U.S. government-sponsored employment program participants have received such training. To better understand long-term gains from job skills training, this study compared employment and earnings trajectories between program participants who received job skills training and those who received basic services only. Using data from the National Longitudinal Survey of Youth 1979, we estimated 33-year employment and earnings trajectories among U.S. baby-boomer cohorts while accounting for baseline group heterogeneity using inverse propensity score weighting. We found increases in employment rates over the life course, especially among Black women. Job skills training also increased earnings by up to 69.6 % compared to basic services only. Despite the long-term gains in employment and earnings, job skills training participation is not sufficient to address gender as well as racial and ethnic gaps in full-time employment. Findings reinforce the importance of incorporating job skills training as an essential service element of government-sponsored employment programs to improve long-term labor market outcomes among Americans with economic disadvantages.     

Unionization and Income Growth of Racial Minority Immigrants in Canada: A Longitudinal Study

This study examines the effect of unionization on the labor market integration of newly arrived immigrants in Canada. We find that non‐white recent immigrants gain access to unionized jobs at a slower rate than do white recent immigrants. The effect of unionization on earnings is somewhat lower for non‐white recent immigrants than for white recent immigrants. These findings are based on growth curve modeling of longitudinal data from the Survey of Labour and Income Dynamics (SLID). Therefore, unionization does not contribute to reducing the earnings gap of non‐white recent immigrants relative to white immigrants and the native‐born.     

The Teaching of Population by Sociologists

Abstract

This paper addresses the impact of forces in the new economy on the earnings of workers. Using data from the Indiana Survey of Workers In a Polarized Economy (ISWIPE), we examine the impact of several variables that have not been systematically examined in previous research. Specifically, we investigate the impact on earnings of the new economy variables of downsizing, contingent work, “job slide,” perceived job security, working with computers, job growth, deindustrialization, and work in the marginal sector. After controlling for a variety of sociodemographic, class, and structural variables, we find that indicators of the new economy contribute importantly to the explanation of earnings. We find that working in the marginal sector is more important than traditional dualistic concepts such as core and periphery sectors and primary and secondary labor markets for explaining earnings. We believe our findings provide evidence for the importance of a “reconstituted core and periphery” in the labor market. We conclude with a discussion of the implications of our results.     

Arbeitsmarktsegregation und Einkommen

What mechanisms link horizontal labour market segregation and the gender gap in wages? One explanation is based on the cultural devaluation of typically ‘female’ skills and work contents which are held responsible for lower earnings in these occupations. In the present study the idea of devaluation of ‘female’ work is contrasted with other possible explanations such as occupational differences in specialized human capital requirements or unpleasant work conditions. Based on a large sample of employed persons in Germany (IAB-Beschaeftigtenstichprobe 1975–1995) and on a survey on work conditions (BIBB/IAB-Erhebung 1991/92), the influence of ‘female’ work contents and other occupational variables on individual earnings is modeled for East and West Germany separately. The results of multilevel analyses accounting for the embeddedness of individuals in occupations and industries show that some ‘female’ work contents — typing, cleaning and selling — decrease income, and thus are culturally devalued. In contrast, occupational differences in specialized human capital requirements and work conditions do seemingly not affect individual wages. In East Germany the results in regard of devaluation are less pronounced. In both parts of the country there is an unabatedly strong effect of individual sex on earnings which cannot be explained by the introduced occupational characteristics.