Working Paper: NBER ID: w13883
Authors: Joseph G. Altonji; Prashant Bharadwaj; Fabian Lange
Abstract: We examine changes in the characteristics of American youth between the late 1970s and the late 1990s, with a focus on characteristics that matter for labor market success. We reweight the NLSY79 to look like the NLSY97 along a number of dimensions that are related to labor market success, including race, gender, parental background, education, test scores, and variables that capture whether individuals transition smoothly from school to work. We then use the re-weighted sample to examine how changes in the distribution of observable skills affect employment and wages. We also use more standard regression methods to assess the labor market consequences of differences between the two cohorts. Overall, we find that the current generation is more skilled than the previous one. Blacks and Hispanics have gained relative to whites and women have gained relative to men. However, skill differences within groups have increased considerably and in aggregate the skill distribution has widened. Changes in parental education seem to generate many of the observed changes
Keywords: American youth; labor market; skills; employment; wages; economic inequality
JEL Codes: J01; J11; J15; J16; J31; J82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| 1979 cohort characteristics (J11) | 1997 cohort characteristics (I24) |
| 1997 cohort characteristics (I24) | labor market outcomes (J48) |
| changes in parental education (I24) | changes in youth characteristics (J13) |
| changes in youth characteristics (J13) | adult outcomes (I26) |
| widening skill distribution within racial and gender groups (J79) | overall inequality in skill distribution (D39) |
| skill gaps across race and gender (J79) | relative gains for black and Hispanic males and females (I24) |
| increase in skills for the younger cohort (J24) | average wage increase (J31) |