Working Paper: NBER ID: w31665
Authors: Andrs Erosa; Luisa Fuster; Gueorgui Kambourov; Richard Rogerson
Abstract: We document systematic differences in wage and earnings inequality between and within occupations and show that these differences are intimately related to systematic differences in labor supply across occupations. We then develop a variant of a Roy model in which earnings are a non-linear function of hours, with the extent of this non-linearity differing across occupations. In our theory, the interplay between heterogeneity in tastes for leisure and occupational differences in non-linearities affects the sorting of workers. Moreover, this interplay is crucial to account for the facts on the distributions of hours, wages, and earnings within and across occupations.
Keywords: No keywords provided
JEL Codes: E20; J2; J3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| wage and earnings inequality (J31) | variance of log mean earnings (J31) |
| variance of log mean earnings (J31) | variance of log mean wages (J31) |
| mean earnings (J31) | mean wages (J31) |
| mean hours worked (J22) | wage and earnings inequality (J31) |
| variance of log hours (C29) | mean wages (J31) |
| heterogeneous tastes for leisure (D11) | occupational choice (J29) |
| heterogeneous tastes for leisure (D11) | distribution of wages and earnings (J31) |