No: it is at least as large at bottom percentiles of the earnings distribution. Conditional quantile regressions reveal that while the gap at top percentiles is largest among the most-educated, the gap at bottom percentiles is largest among the least-educated. Gender differences in labor supply create more pay inequality among the least-educated than they do among the most-educated. The pay gap has declined throughout the distribution since 2006, but it declined more for the most-educated women. Current economics-of-gender research focuses heavily on the top end; equal emphasis should be placed on mechanisms driving gender inequality for noncollege-educated workers.
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The Gender Pay Gap and Its Determinants Across the Human Capital Distribution
June 2023
Working Paper Number:
CES-23-31R
This paper links American Community Survey data and postsecondary transcript records to examine how the gender pay gap varies across the distribution of education credentials for a sample of 2003-2013 graduates. Although recent literature emphasizes gender inequality among the most-educated, we find a smaller gender pay gap at higher education levels. Field-of-degree and occupation effects explain most of the gap among top bachelor's graduates, while work hours and unobserved channels matter more for less-competitive bachelor's, associate, and certificate graduates. We develop a novel decomposition of the child penalty to examine the role of children in explaining these results.
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Selection and Specialization in the Evolution of Marriage Earnings Gaps
October 2015
Working Paper Number:
CES-15-36
We examine changes in marriage and earnings patterns across four cohorts born between 1936 and 1975, using data from a series of Survey of Income and Program Participation panels linked to administrative data on earnings. We find that for both men and women, marriage has become increasingly positively associated with education and earnings potential. We compare ordinary least squares (OLS) and fixed effect (FE) estimates of the earnings differential associated with marriage. We find that the marriage earnings gap fell for women in fixed-effect estimates implying that the impact of specialization has diminished over time. We also find that increasingly positive selection into marriage means that OLS estimates overstate the reduction in the marriage earnings gap. While our findings imply that marriage is no longer associated with lower earnings among women without minor children in our most recent cohort, the motherhood gap remains large. Among men, we find that the marriage premium actually increases for more recent birth cohorts in fixed-effects regressions.
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Using Internal Current Population Survey Data to Reevaluate Trends in Labor Earnings Gaps by Gender, Race, and Education Level
July 2008
Working Paper Number:
CES-08-18
Most empirical studies of trends in labor earnings gaps by gender, race or education level are based on data from the public use March Current Population Survey (CPS). Using the internal March CPS, we show that inconsistent topcoding in the public use data will understate these gaps and inaccurately capture their trends. We create a cell mean series beginning in 1975 that provides the mean of all values above the topcode for each income source in the public use March CPS and better approximate earnings gaps found in the internal March CPS than was previously possible using publically available data.
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Black-White Differences in Intergenerational Economic Mobility in the U.S.
December 2011
Working Paper Number:
CES-11-40
Traditional measures of intergenerational mobility such as the intergenerational elasticity are not useful for inferences concerning group differences in mobility with respect to the pooled income distribution. This paper uses transition probabilities and measures of 'directional rank mobility' that can identify inter-racial differences in intergenerational mobility. The study uses two data sources including one that contains social security earnings for a large intergenerational sample. I find that recent cohorts of blacks are not only significantly less upwardly mobile but also significantly more downwardly mobile than whites. This implies a steady-state distribution in which there is no racial convergence in income. A descriptive analysis using covariates reveals that test scores in adolescence can explain much of the racial difference in both upward and downward mobility. Family structure can account for some of the racial gap in upward mobility but not downward mobility. Completed schooling and parental wealth also appear to account for some of the racial gaps in intergenerational mobility.
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U.S. Long-Term Earnings Outcomes by Sex, Race, Ethnicity, and Place of Birth
May 2021
Working Paper Number:
CES-21-07R
This paper is part of the Global Income Dynamics Project cross-country comparison of earnings inequality, volatility, and mobility. Using data from the U.S. Census Bureau's Longitudinal Employer-Household Dynamics (LEHD) infrastructure files we produce a uniform set of earnings statistics for the U.S. From 1998 to 2019, we find U.S. earnings inequality has increased and volatility has decreased. The combination of increased inequality and reduced volatility suggest earnings growth differs substantially across different demographic groups. We explore this further by estimating 12-year average earnings for a single cohort of age 25-54 eligible workers. Differences in labor supply (hours paid and quarters worked) are found to explain almost 90% of the variation in worker earnings, although even after controlling for labor supply substantial earnings differences across demographic groups remain unexplained. Using a quantile regression approach, we estimate counterfactual earnings distributions for each demographic group. We find that at the bottom of the earnings distribution differences in characteristics such as hours paid, geographic division, industry, and education explain almost all the earnings gap, however above the median the contribution of the differences in the returns to characteristics becomes the dominant component.
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Understanding Earnings Instability: How Important are Employment Fluctuations and Job Changes?
August 2009
Working Paper Number:
CES-09-20
Using three panel datasets (the matched CPS, the SIPP, and the newly available Longitudinal Employment and Household Dynamics (LEHD) data), we examine trends in male earnings instability in recent decades. In contrast to several papers that find a recent upward trend in earnings instability using the PSID data, we find that earnings instability has been remarkably stable in the 1990s and the 2000s. We find that job changing rates remained relatively constant casting doubt on the importance of labor market 'churning.' We find some evidence that earnings instability increased among job stayers which lends credence to the view that greater reliance on incentive pay increased instability of worker pay. We also find an offsetting decrease in earnings instability among job changers due largely to declining unemployment associated with job changes. One caveat to our findings is that we focus on men who have positive earnings in two adjacent years and thus ignore men who exit the labor force or re-enter after an extended period. Preliminary investigation suggests that ignoring these transitions understates the rise in earnings instability over the past two decades.
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Interpreting Cohort Profiles of Lifecycle Earnings Volatility
April 2024
Working Paper Number:
CES-24-21
We present new estimates of earnings volatility over time and the lifecycle for men and women by race and human capital. Using a long panel of restricted-access administrative Social Security earnings linked to the Current Population Survey, we estimate volatility with both transparent summary measures, as well as decompositions into permanent and transitory components. From the late 1970s to the mid 1990s there is a strong negative trend in earnings volatility for both men and women. We show this is driven by a reduction in transitory variance. Starting in the mid 1990s there is relative stability in trends of male earnings volatility because of an increase in the variance of permanent shocks, especially among workers without a college education, and a more attenuated trend decline among women. Cohort analyses indicate a strong U-shape pattern of volatility over the working life, which comes from large permanent shocks early and later in the lifecycle. However, this U-shape shifted downward and leftward in more recent cohorts, the latter from the fanning out of lifecycle transitory volatility in younger cohorts. These patterns are more pronounced among White men and women compared to Black workers.
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Granular Income Inequality and Mobility using IDDA: Exploring Patterns across Race and Ethnicity
November 2023
Working Paper Number:
CES-23-55
Shifting earnings inequality among U.S. workers over the last five decades has been widely stud ied, but understanding how these shifts evolve across smaller groups has been difficult. Publicly available data sources typically only ensure representative data at high levels of aggregation, so they obscure many details of earnings distributions for smaller populations. We define and construct a set of granular statistics describing income distributions, income mobility and con ditional income growth for a large number of subnational groups in the U.S. for a two-decade period (1998-2019). In this paper, we use the resulting data to explore the evolution of income inequality and mobility for detailed groups defined by race and ethnicity. We find that patterns identified from the universe of tax filers and W-2 recipients that we observe differ in important ways from those that one might identify in public sources. The full set of statistics that we construct is available publicly as the Income Distributions and Dynamics in America, or IDDA, data set.
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Trends in Earnings Volatility using Linked Administrative and Survey Data
August 2020
Working Paper Number:
CES-20-24
We document trends in earnings volatility separately by gender in combination with other characteristics such as race, educational attainment, and employment status using unique linked survey and administrative data for the tax years spanning 1995-2015. We also decompose the variance of trend volatility into within- and between-group contributions, as well as transitory and permanent shocks. Our results for continuously working men suggest that trend earnings volatility was stable over our period in both survey and tax data, though with a substantial countercyclical business-cycle component. Trend earnings volatility among women declined over the period in both survey and administrative data, but unlike for men, there was no change over the Great Recession. The variance decompositions indicate that nonresponders, low-educated, racial minorities, and part-year workers have the greatest group specific earnings volatility, but with the exception of part-year workers, they contribute least to the level and trend of volatility owing to their small share of the population. There is evidence of stable transitory volatility, but rising permanent volatility over the past two decades in male and female earnings.
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Male Earnings Volatility in LEHD before, during, and after the Great Recession
September 2020
Working Paper Number:
CES-20-31
This paper is part of a coordinated collection of papers on prime-age male earnings volatility. Each paper produces a similar set of statistics for the same reference population using a different primary data source. Our primary data source is the Census Bureau's Longitudinal Employer-Household Dynamics (LEHD) infrastructure files. Using LEHD data from 1998 to 2016, we create a well-defined population frame to facilitate accurate estimation of temporal changes comparable to designed longitudinal samples of people. We show that earnings volatility, excluding increases during recessions, has declined over the analysis period, a finding robust to various sensitivity analyses. Although we find volatility is declining, the effect is not homogeneous, particularly for workers with tenuous labor force attachment for whom volatility is increasing. These 'not stable' workers have earnings volatility approximately 30 times larger than stable workers, but more important for earnings volatility trends we observe a large increase in the share of stable employment from 60% in 1998 to 67% in 2016, which we show to largely be responsible for the decline in overall earnings volatility. To further emphasize the importance of not stable and/or low earning workers we also conduct comparisons with the PSID and show how changes over time in the share of workers at the bottom tail of the cross-sectional earnings distributions can produce either declining or increasing earnings volatility trends.
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