Fringe benefits and income inequality

In this paper, we analyze the distribution of fringe benefits among workers and underline its implications for income inequality. To this end, we develop a positional approach to inequality based on the concept of rent as a potential link between positions and their rewards. We hypothesize that workers extract rent in the form of benefits in industries with worker leverage (in the form of unioniziation, internal labor market, and public employment) or share rent with firms in highly profitable industries that endure for efficiency wage reasons. On the basis of a unique dataset from Israel, we test these hypotheses by estimating the probabilities of obtaining benefits according to industries’ structural features while controlling for cross-industrial differences in workers’ demographic and human capital characteristics. The analyses reveal that benefits are determined by structural factors, representing a separate dimension of the rewards attached to positions, different from earnings. We further stress the importance of incorporating fringe benefits into inequality research, given that benefits together with earnings stratify workers and evidently signify structured positions in the economy.     

Explaining levels of within-group wage inequality in U.S. labor markets

Most research on earnings inequality has focused on the growing gap between workers of different races and at different education, age, and income levels, but a large portion of the increasing inequality has actually occurred within these groups. This article focuses on the extent and sources of "within-group" wage inequality in more than 500 labor markets in the United States in 1990. In addition to documenting that within-group wage inequality across regions varies more widely today than over the past several decades, the analysis reveals that two frequently cited explanations of rising wage inequality over time have little impact on within-group wage inequality when measured at the local labor market level: (1) industrial shifts and (2) increased technology and trade. By contrast, flexible and insecure employment conditions (e.g., unemployment, contingent work, and immigration) are associated strongly with high local levels of within-group wage inequality, especially among women.     

Employment gains and wage declines: The erosion of black women’s relative wages since 1980

Public policy initiatives in the 1950s and 1960s, including Affirmative Action and Equal Employment Opportunity law, helped mitigate explicit discrimination in pay, and the expansion of higher education and training programs have advanced the employment fortunes of many American women. By the early 1980s, some scholars proclaimed near equity in pay between black and white women, particularly among young and highly skilled workers. More recent policy initiatives and labor market conditions have been arguably less progressive for black women’s employment and earnings: through the 1980s, 1990s, and the first half of the 2000s, the wage gap between black and white women widened considerably. Using data from the Current Population Survey Merged Outgoing Rotation Group (CPS-MORG), this article documents the racial wage gap among women in the United States from 1979 to 2005. We investigate how demographic and labor market conditions influence employment and wage inequality among black and white women over the period. Although shifts in labor supply influence the magnitude of the black-white wage gap among women, structural disadvantages faced by black women help explain the growth in the racial wage gap.     

Labor market assimilation and the self-employment decision of immigrant entrepreneurs

This paper uses data from the 1980 and 1990 U.S. Censuses to study labor market assimilation of self-employed immigrants. Separate earnings functions for the self-employed and wage/salary workers are estimated. To control for endogenous sorting into the sectors, models of the self-employment decision are estimated. Self-employed immigrants are found to do substantially better in the labor market than wage/salary immigrants. Earnings of self-employed immigrants are predicted to converge with natives' wage/salary earnings at about age 30 and natives' self-employed earnings at about age 40. Including the self-employed in the sample reduces the immigrant-native earnings gap by, on average, 14%. Received: 10 November 1999/Accepted: 3 August 2000     

子女数量对已婚女性劳动供给和工资的影响

本文利用中国健康与营养调查数据估计了子女数量对已婚女性劳动供给、工作时间投入和工资水平的影响,并通过采用工具变量法和赫克曼两步法(Heckman two-step)解决了回归分析中子女数量的内生性问题以及工作时间和工资方程中存在的样本选择问题,第一次全面考察了中国城镇和农村已婚女性生育率对其劳动供给行为和工资水平的因果效应。实证分析表明,生育子女数量的增加会显著降低城镇已婚女性的劳动供给,并且显著降低在业女性的工作时间投入和工资水平。生育子女数量的增加对农村已婚女性是否参与非农就业没有显著影响,对参与了非农就业女性的工资也没有显著影响,但是显著降低了其工作时间投入。     

The Role of Family Behaviors in Determining Income Distribution: The Case of South Korea

In this article, we examined what has contributed to the worsening income inequality and poverty between 1996 and 2011 in South Korea. We used a rank-preserving exchange method and a conditional reweighting method to assess the roles of family behaviors—including female labor force participation and family structure—characteristics of household heads, and men’s earnings. The results showed that the change in men’s earnings was a dominant factor in accounting for the increasing income inequality and poverty. The change in age and education among household heads also contributed significantly to the worsening income distribution. The change in family structure mainly affected the income disparity among lower-income families and increased poverty. The rise in women’s labor force participation improved the income distribution but not considerably. The distributional roles of family have not worked to prevent or reverse the worsening income distribution in the past few decades in South Korea.     

Earnings inequality and subnational political economy in the United States, 1970–2000

Previous studies of rising inequality in the United States have overlooked the potential role of subnational political economic variation as an institution that shapes earnings restructuring. This paper uses hierarchical linear models to examine how state right-to-work laws contribute to growth in inequality in 80 metropolitan labor markets from 1970 to 2000. Contrary to conventional expectations, labor markets in states with right-to-work laws experience relatively mild growth in earnings inequality, and are less unequal by 2000 than non-RTW labor markets. The trend cannot be fully explained by union density, job growth, uneven development or variation in racial inequality. The findings contribute to a distinctly sociological perspective on rising inequality that considers how social, institutional and economic factors interact at the local and state levels to shape earnings.     

Measuring immigrant wage growth using matched CPS files

Cross-sectional estimates of immigrant wage growth have painted an optimistic picture of the ability of immigrants to adapt to the U.S. labor market: Studies using cross-sectional data have generally found the wage growth of immigrants to exceed that of the native born. This optimistic picture of immigrant economic assimilation was challenged by the important finding that compared to earlier immigrant cohorts, recent immigrants started at much lower wages. As such, the high wage growth of immigrants relative to the native born measured in cross-sectional data may simply be the spurious result of declining immigrant earnings ability. In this paper, we match Current Population Survey samples so that the wages of individual immigrant and native-born men can be followed for one year. We find that the wage growth of immigrants does exceed that of the native born. The general finding of faster immigrant wage growth also holds when imposing the foreign-born geographic distribution upon natives, but not when imposing the native-born geographic distribution on the foreign born—a result consistent with some theories of immigrant assimilation. In each comparison, however, the actual wage growth of immigrants relative to natives is similar to the predictions of cross-sectional regressions. This similarity suggests that either there is no cohort quality bias in the cross-sectional estimates of immigrant wage growth, or that there has been a coincidental increase in immigrant wage growth as the entry wages of immigrants have fallen.     

Racial equity or racial equality

This study examines the relationship between racial equity in labor market processes and racial equality in future labor market rewards. In particular, a regression standardization procedure is used to project the degree of racial inequality in earnings that would exist among men at various future points in time based on three different sets of assumptions about attainment processes in labor market and educational institutions. The most important results suggest that even if racial discrimination were eliminated immediately in labor market and educational institutions, it would take almost 50 years for the black-white earnings ratio to reach .95. This incompatibility between equity and equality needs to be considered more explicitly both by those who advocate a color-blind labor market and those who advocate preferential treatment for blacks.     

Trends in Economic Homogamy: Changes in Assortative Mating or the Division of Labor in Marriage?

The growing economic resemblance of spouses has contributed to rising inequality by increasing the number of couples in which there are two high- or two low-earning partners. The dominant explanation for this trend is increased assortative mating. Previous research has primarily relied on cross-sectional data and thus has been unable to disentangle changes in assortative mating from changes in the division of spouses’ paid labor—a potentially key mechanism given the dramatic rise in wives’ labor supply. We use data from the Panel Study of Income Dynamics (PSID) to decompose the increase in the correlation between spouses’ earnings and its contribution to inequality between 1970 and 2013 into parts due to (a) changes in assortative mating, and (b) changes in the division of paid labor. Contrary to what has often been assumed, the rise of economic homogamy and its contribution to inequality is largely attributable to changes in the division of paid labor rather than changes in sorting on earnings or earnings potential. Our findings indicate that the rise of economic homogamy cannot be explained by hypotheses centered on meeting and matching opportunities, and they show where in this process inequality is generated and where it is not.     

How do marital status,work effort,and wage rates interact?

How marital status interacts with men's earnings is an important analytic and policy issue, especially in the context of debates in the United States over programs that encourage healthy marriage. This paper generates new findings about the earnings-marriage relationship by estimating the linkages among flows into and out of marriage, work effort, and wage rates. The estimates are based on National Longitudinal Survey of Youth panel data, covering 23 years of marital and labor market outcomes, and control for unobserved heterogeneity. We estimate marriage effects on hours worked (our proxy for work effort) and on wage rates for all men and for black and low-skilled men separately. The estimates reveal that entering marriage raises hours worked quickly and substantially but that marriage's effect on wage rates takes place more slowly while men continue in marriage. Together; the stimulus to hours worked and wage rates generates an 18%-19% increase in earnings, with about one-third to one-half of the marriage earnings premium attributable to higher work effort. At the same time, higher wage rates and hours worked encourage men to marry and to stay married. Thus, being married and having high earnings reinforce each other over time.     

An analysis of variations in U. S. fertility and female labor force participation trends

This study is based on time series data from 1947–1977 on fertility and female labor force participation, and examines (a) the effects of male relative income and female earnings on the level and timing of fertility and female labor force participation, and (b) the relative importance of variations in relative income and female wage rates in explaining the fluctuations in both fertility and female labor supply. The results suggest that relative income exerts a significant positive effect on fertility and a negative effect on female work effort. However, female wage rates appear to be the dominant factor in explaining variations in fertility and female labor force participation over the past two decades, with increases in female earnings leading to both depressed fertility and increased labor force participation of women.     

The contribution of changes in employment composition and relative returns to the evolution of wage inequality: the case of Spain

Wage inequality in Spain decreased slightly between 1995 and 2006 despite significant changes in employment composition. Changes in the composition of the workforce would have increased inequality keeping constant wage structure, but changes in wage differentials are the most important factor determining the evolution of inequality. By subperiods, the low end of the wage distribution compressed between 1995 and 2002, while it experienced a slight increase in inequality afterward, as it was observed in the USA. On the other hand, in contrast to the American case, the high end of the wage distribution was strikingly compressed in the second period.     

农村内部收入不平等变动的成因——基于回归分解的研究途径

近年来中国农村居民收入持续增长,但是农村收入差距却持续扩大。采用回归分解的方法,利用吉林省农户抽样调查数据,对农村内部收入不平等及其变动趋势的成因进行分析。研究结果表明,劳动力投入、工资性收入和人力资本对农户收入的增加起到明显的作用;影响农村收入不平等水平的要素有劳动力投入、耕地、工资性收入、人力资本要素以及地区差异;耕地、工资性收入和劳动力投入对农村内部收入不平等的增加有显著影响,其中耕地的作用占51.60%,超过一半的解释能力,而教育对降低收入不平等水平有一定的作用。     

Differences in the process of earnings determination and inequality between women and men in South Korea

Women have increasingly participated in the labor force in South Korea over the past thirty years. Making up 30% of the labor force in 1960, they grew to comprise 47% by 1990. The economic status of female workers has also improved relative to men; the percentage of female wages to male wages increased from 44.1 in 1971 to 53.5 in 1990. Against this historical backdrop, the author examines the process of earnings determination of workers and assesses the explanatory power of human capital and sex segregation theory on earnings inequality between women and men in the South Korean labor market. This is done by analyzing the 1977-90 waves of the Occupational Wage Survey, a pooled cross-section and time series data set for all non-agricultural occupations. Two separate regressions for men and women are estimated using two-stage weighted least squares methods. It is found after analysis that education and tenure have positive effects on logged earnings. Employment in occupations with greater numbers of women tends to lower workers' earnings regardless of their sex, but women are penalized to a four times greater extent than men for working with other women in occupations. Sex segregation becomes insignificant in lowering women's earnings level when occupational groups are controlled. Finally, the inequality in earnings between genders decreased over the period 1977-90 during which women's earnings increased more than those of men.     

Work and pay in flexible and regulated labor markets: A generalized perspective on institutional evolution and inequality trends in Europe and the U.S.

In recent years a “unified theory” has emerged out of labor economics, which argues that a combination of “macroeconomic shocks” and flexible labor market institutions in the U.S. has produced strong upward trends in wage inequality, while these same shocks have produced high unemployment and low employment growth in Europe as a side effect of the wage stability preserved by that continent's rigid labor market institutions. This paper takes issue with the common view that inequality trends are best explained by a model of stable institutions interacting with changing macroeconomic forces. It argues that European institutions in fact have changed, and that institutional changes which were triggered by the broader macroeconomic forces have affected the form as well as the size of inequality trends. While the U.S. has experienced rising strong skill-based wage inequality, institutional change in France has produced an upward trend in the density of insecure jobs and an increased concentration of low-skill workers in insecure jobs. These results challenge the view that low employment rates is the sole mechanism through which European labor markets have absorbed asymmetric shocks to their demand for labor.     

Immigration and males' earnings inequality in the regions of the United States

In this paper I investigate the impact of recent immigration on males' earnings distributions in the major regions of the United States. I use six counterfactual scenarios to describe alternative regional skill distributions and wage structures for the population of natives and long-term immigrants in the absence of recent immigration. I find that immigration over the last three decades can account for a substantial portion of the variation in inequality across the regions. Recent immigration has contributed moderately to national growth in males' earnings inequality, primarily by changing the composition of the population.     

Wage shocks,household labor supply,and income instability

Do married couples make joint labor supply decisions in response to each other’s wage shocks? The study on this question aids in understanding the link between the rising income instability and household insurance. Existing studies on household insurance either focus on consumption smoothing and take labor supply as a given, or only focus on wife’s labor responses to husband’s unemployment shocks. This article develops an intra-household insurance model that allows for insurance against permanent and transitory wage shocks from both partners. Estimation using the Survey of Income and Program Participation shows that wife increases labor supply in response to husband’s adverse wage shocks when both of them are working, and wife gets more nonlabor income when she is out of work. This intra-household insurance reduces earnings instability by about 2 to 9 %. These results suggest that joint labor supply decisions provide an extra smoothing effect on income instability.     

Mobility,Stagnation, or Attrition? Diverse Earning Trajectories in a Cohort of Foreign‐born Men

Researchers and policymakers frequently debate about the integration of immigrants into the US economy. These debates are often based on limited data that do not capture the diversity of immigrants who arrived in the later twentieth century. Related research has also struggled to incorporate the experience of short‐term immigrants or immigrants who move in and out of the labor force. Using records from the Social Security Administration, we track the complete cohort of foreign‐born men who received social security numbers in 1978 through their subsequent working years and characterize their earning trajectories. We find that the share of foreign‐born men with low earnings declined over time, mainly due to attrition from the formal labor force. We also show, for the first time, that immigrants’ employment and earning histories vary considerably by their countries of origin: while those from several countries in Asia and Africa experienced substantial earnings growth and tended to stay in the United States for the long term, men from Central America and the Caribbean experienced more stagnation and had high levels of temporary and permanent attrition from the formal labor force. We end by discussing the historical contingencies and socioeconomic contexts—in sending countries and the United States—that shaped these trajectories.     

Does Human Capital Raise Earnings for Immigrants in the Low-Skill Labor Market?

We use monthly Survey of Income and Program Participation data from 1996–1999 and 2001–2003 to estimate the determinants of differentiation in intercepts and slopes for age/earnings profiles of low-skill immigrant and native male workers. Our findings provide further depth of understanding to the“mixed” picture of earnings determination in the low-skill labor market that has been reported by others. On the positive side, many immigrants are employed in similar occupations and industries as natives. Both groups show substantial wage gains over time and generally receive similar returns to years of schooling completed. Immigrants also receive substantial returns to acculturation, measured as age at arrival and English language skill. These results cast doubt on the strong version of segmented labor market theory, in which low-skill immigrants are permanently consigned to dead-end jobs with no wage appreciation. On the negative side, immigrants earn approximately 24% less than natives and are less likely to occupy supervisory and managerial jobs. Latino immigrants receive lower returns to education than do white immigrants. Furthermore, age at arrival and language ability do not explain the lower returns to education experienced by Latino immigrants. These results suggest that Latino immigrants in particular may suffer from barriers to mobility and/or wage discrimination. Whether these negative labor market experiences occur primarily for illegal immigrants remains unknown.