REAL WAGE AND EMPLOYMENT UNCERTAINTY AND THE LABOR FORCE PARTICIPATION DECISIONS OF MARRIED WOMEN

This paper argues that an important factor in a married woman's decision to enter the labor force is the degree of uncertainty associated with expectations offuture wages and (husband's) income, and that high levels of uncertainty during the 1970s may have contributed substantially to the growth in participation in that decade. We apply a model of autoregressive conditional heteroskedasticity to aggregate time series data to measure the level of uncertainty in each period. Our estimates support our hypothesis that the level of uncertainty is an important determinant of labor force participation for married women.     

INCOME INEQUALITY: THE IMPLICATIONS OF ECONOMIC STRUCTURE AND SOCIAL CONDITIONS

During the past few decades income inequality has been increasing in the United States and other developed nations, and is having major social consequences. In this study county-level data for the United States was analyzed to test the relative importance of three alternative approaches for explaining increased levels of inequality. These three approaches include economic structure, social conditions, and a model that maintains that both social conditions and inequality are a function of economic structure. The results revealed that social conditions were much more strongly related to inequality than economic structure and little support was found for the theoretical model. The two social conditions most strongly related to inequality included female employment and the percent of female-headed households. Counties with high levels of female employment tended to have low levels of inequality, while counties with high proportions of female-headed households tend to have high levels of inequality. The implications of these findings are discussed.     

QUALITY OF AVAILABLE MATES,EDUCATION, AND HOUSEHOLD LABOR SUPPLY

We investigate the impact of sex ratios by education and metropolitan area on spouses’ bargaining power and labor supplies, to capture the local and qualitative nature of mate availability. Using Current Population Survey and Census data for 2000, 1990, and 1980, we estimate these effects in a collective household framework. We find that a higher relative shortage of comparably educated women in the couple’s metropolitan area reduces wives’ labor supply and increases their husbands’. The impact is stronger for couples in higher education groups but not significant for high school graduates. Results are similar across decades. No such effects are found for unmarried individuals. (JEL D1, J22)     

LABOR MARKET SEGMENTATION AND INCOME INEQUALITY IN URBAN CHINA

Though central to the market transition debate, the effect of the institutional realignment on stratification order has not been adequately addressed. I reformulate market transition hypotheses and use data from a recent survey in a Chinese city to test market transition theory and path dependence arguments. I make the linkage between literatures on labor market segmentation and literatures on market transition. I show different returns to human and political capital in the private and state sectors in urban China. My research suggests modifications of the conceptual issues used in the market transition debate.     

LABOR SUPPLY DIFFERENCES BETWEEN MARRIED HETEROSEXUAL WOMEN AND PARTNERED LESBIANS: A SEMI‐PARAMETRIC DECOMPOSITION APPROACH

Using 2000 U.S. Census data we illustrate the importance of accounting for household specialization in lesbian couples when examining labor supply differences between heterosexual married and partnered lesbian women. Specifically, we find the labor supply gap is substantially larger between married women and partnered lesbian women who specialize in market production (primary earners) than between married women and partnered lesbian women who specialize in household production (secondary earners). Applying a semi‐parametric decomposition approach we show that controlling for children significantly reduces the gap between married women and secondary lesbian earners both in terms of the decision to remain attached to the labor market (the extensive margin) and annual hours of work conditional on working (the intensive margin). Further, the effect of controlling for children primarily reduces the percentage of secondary lesbian earners working extremely high annual hours. (JEL J15, J16, J22)     

ACCOUNTING FOR URBAN CHINA'S RISING INCOME INEQUALITY: THE ROLES OF LABOR MARKET,HUMAN CAPITAL,AND MARRIAGE MARKET FACTORS

This paper analyzes China's rising family income inequality since the early 1990s when the urban labor market started its transformation from a centrally controlled to a market‐driven one. We document the trends in income inequality over the period of 1992–2009 using the Urban Household Survey data, and adopt the approach recently proposed by Eika et al. (2014) to decompose changes in income inequality. We find that labor market factors accounted for about three‐quarters of the overall increases in income inequality while falling marriage rate contributed the other quarter. Changes in human capital levels and marital assortativeness have not contributed to the rising inequality. (JEL D31, I26, J12)     

PITFALLS IN TESTING FOR COINTEGRATION BETWEEN INEQUALITY AND THE REAL INCOME

Frank (2009) constructed a comprehensive panel of state‐level income inequality measures using individual tax filing data from the Internal Revenue Service. Employing an array of cointegration exercises for the data, he reported a positive long‐run relationship between income inequality and the real income per capita in the United States. This article questions the validity of his findings. First, we suggest a misspecification problem in his approach regarding the order of integration in the inequality index, which shows evidence of nonstationarity only for the post‐1980 data. Second, we demonstrate that his findings are not reliable because the panel cointegration test he used requires cross‐section independence, which is inappropriate for the U.S. state‐level data. Employing panel tests that allow cross‐section dependence, we find no evidence of cointegration between inequality and the real income. (JEL D31, O40)     

INTERMARRIAGE AND THE LABOR MARKET OUTCOMES OF ASIAN WOMEN

The impact of intermarriage with natives, on labor market outcomes of immigrants, is not homogeneous across ethnic groups. Wages of Asian women are compared with non‐Asians. Both ordinary least squares and instrumental variables estimates of the effects of intermarriage on the wages of Asian women are negative and significant. Non‐Asian women earn a wage premium that becomes insignificant when controls for selection into marriage are introduced. One possible explanation for the intermarriage penalty for Asians is an income effect of having a high‐earning native husband. Intermarriage penalties rise with husband's education. Assimilation patterns of intermarried Asians indicate that they have lower initial wages, market hours, and employment, but exhibit faster rates of growth over their years of stay. The results are robust across Asian subgroups and husband's ethnicity. (JEL J16, J12, J31, J61)     

RECONCILING MICRO AND MACRO ESTIMATES OF THE FRISCH LABOR SUPPLY ELASTICITY

This paper explores the large gap between the microeconometric estimates of the Frisch labor supply elasticity (0–.5) and the values used by macroeconomists to calibrate general equilibrium models (2–4). These two ranges identify two fundamentally different notions, the micro and macro Frisch elasticity, respectively. Due to the different definitions, there are two restrictions in the micro Frisch elasticity that are relaxed in the macro Frisch elasticity. First, the micro Frisch elasticity focuses only on prime‐aged married males who are the head of their household, while the macro Frisch elasticity represents the whole population. Second, the micro Frisch elasticity only incorporates intensive margin fluctuations in hours, while the macro Frisch elasticity includes both intensive and extensive margin fluctuations. This paper finds that relaxing these two restrictions causes estimates of the Frisch elasticity to increase from 0.2 to between 2.9 and 3.1, indicating that these two restrictions can explain the gap between the microeconometric estimates and the calibration values. However, this paper demonstrates that these estimates of the macro Frisch elasticity are sensitive to the estimation procedure and also the exclusion of older individuals, implying that calibration values used for macroeconomic models should be selected carefully. (JEL E24, J22)     

THE SUPPLY OF INDIVIDUAL HOURS AND LABOR FORCE PARTICIPATION UNDER UNCERTAINTY

In the absence of labor supply constraints, this paper shows that an increase in wage-rate uncertainty alters the optimal supply of individual hours but leaves the decision to participate unchanged. In the presence of these constraints, it is shown that if researchers are concerned with obtaining consistent parameter estimates of the labor supply function, then it is important to correctly specify the type of uncertainty faced by workers. Specifically, a mean preserving increase- in wage-rate uncertainty lowers the participation rate, while an increase in non-wage income uncertainty raises participation.     

SOURCES OF EARNINGS INEQUALITY IN THE BLACK AND WHITE FEMALE LABOR FORCES

Earnings inequality trends and their sources from 1975 to 1986 are evaluated for two historically subordinate working groups—black and white women—using Current Population Survey data. The dual nature of women's employment, improved earnings opportunities, and continuing segregation into low-paying positions create conditions under which earnings inequality in these two groups is expected to increase. Two sources of changing inequality levels are examined to determine which better explains inequality trends: the redistribution of women across labor market positions, which should have occurred due to industrial restructuring; and changes in the rates of earnings returns to labor market positions. For both groups, changes in returns better explain positive inequality trends in the 1980s, although black women's earnings are somewhat more influenced than whites' by their redistribution across labor market positions.     

ECONOMIC RESTRUCTURING,THE EDUCATIONAL INCOME GAP,AND OVERALL INCOME INEQUALITY

An important consequence of the economic structure transformations of recent decades is increased income inequality. While an extensive literature has explored the relationship between economic restructuring and inequality, the unique contribution of this article is that it develops and tests a model that explores the mechanisms by which this process occurs. Specifically, the intervening role of the income gap between the well-educated and those with lower levels of education (the educational income gap) and other moderating factors are explored. The 5 percent Public Use Microdata Sample (PUMS) data from the 2000 Census of Population and Housing was used in the analysis. The data provided strong support for the model. It was found that economic structure and the moderating variables were strongly related to the educational income gap, which in turn was strongly related to overall income inequality. Generally, both the educational income gap and overall income inequality were greater in geographic areas with higher proportions of the labor force employed in services, and both were lower where greater proportions of the labor force were employed in goods-producing industries.     

DISCONTINUITIES IN PENSION BENEFIT FORMULAS AND THE SPOT MODEL OF THE LABOR MARKET: IMPLICATIONS FOR FINANCIAL ECONOMISTS

In their analysis of corporate pension plans, financial economists typically invoke the simplest and the most tractable model of the labor market. This is the spot model, where the worker's cash wage plus accruing pension benefit equals the value of his marginal product in each and every period. This paper provides evidence against the empirical validity of the spot model, and uses provisions common to most pension plans to do so. These findings are relevant to the appropriate measurement of pension liabilities and thus to the present controversy surrounding the termination of overfunded plans and the recapture of surplus assets by the employer. The existence of incentive effects, ruled out by the spot model, may help to unravel certain well known "puzzles," such as the failure of employers to fully fund their plans in spite of the tax advantages of doing so.     

THE ROLE OF ASSETS IN LABOR SUPPLY FUNCTIONS

This paper examines the argument advanced by Smith (1977) that it is inappropriate to include current assets in labor supply functions, under the assumption that a life-cycle model underlies both the asset accumulation process and the labor supply process. It is shown that on a theoretical level current labor supply may still be viewed as a function of current assets. It is also demonstrated that in empirical work based upon a life-cycle labor supply model, it may or may not be appropriate to use current assets or current wealth as an independent variable in a labor supply regression     

THE EFFECTS OF EXPORTS, PUBLIC DEBT, AND DEVELOPMENT ON INCOME INEQUALITY

Classical economics and most modernization theorists hold that a curvilinear relationship exist between income inequality and development level. In this article that relationship is tested. In addition, it is hypothesized that exports and debt as percentages of gross domestic product increases individual income inequality. Regression analyses with controls for development and time were used to test these relationships (N=28 at two time periods). To test these hypotheses with additional data a panel cross-section design was used with data for countries where it is not available a two separate times (N=37 and N=46). The results do not provide evidence to support a curvilinear relationship between development and income distribution when controls for dependency are included in the regression equation. The results from all six regressions presented support the hypothesis that exports enhance income inequality. Moreover, a covariant analysis indicates that exports effect inequality significantly more in undeveloped countries than in developed countries. It is concluded that for less developed countries pursuing export-oriented production, income does not become more evenly distributed at later stages of development.     

INEQUALITY AND GROWTH IN THE UNITED STATES: EVIDENCE FROM A NEW STATE-LEVEL PANEL OF INCOME INEQUALITY MEASURES

This paper introduces a new comprehensive panel of annual state-level income inequality measures spanning the postwar period 1945–2004. For many states, the share of income held by the top decile experienced a prolonged period of stability after World War II, followed by a substantial increase in inequality during the 1980s and 1990s. This paper also presents an examination of the long-run relationship between income inequality and economic growth. Our findings indicate that the long-run relationship between inequality and growth is positive in nature and driven principally by the concentration of income in the upper end of the income distribution. ( JEL D31, O40)     

GENDER DIFFERENCES IN THE PSYCHOLOGICAL WELL-BEING OF MARRIED MEN AND WOMEN: An Asian Case

Using a wide variety of measures of psychological well-being obtained from a representative sample of married men and women in Bangkok, Thailand, we examine gender differences in psychological well-being. We find that, in Bangkok, as in the United States, married men generally enjoy a higher level of psychological well-being than do married women. We find no support for role strain theory, but we do find support for role enhancement theory. We find that social support has little effect on psychological well-being, but that social strain not only has a significant effect on well-being but also largely accounts for gender differences in well-being. The mixed findings suggest the importance of testing theories in different societal contexts, for they may or may not be easily portable from one culture to another.