The Growth in U.S. Male Earnings Inequality: Changing Wage Rates or Working Time

Abstract

Increasing earnings inequality among working-age males since the early 1970s has been documented in several studies, some of which have also apportioned the change due to the inequality in wage rates and working time. This study prsents an alternative decomposition using earnings capacity and earnings capacity utilization. We find that increases in the inequality of working time accounts for at least 30 percent and perhaps, as much as 60 percent of the increase in earnings inequality. We also show the sensitivity of measures of earnings inequality and its determinants to the exclusion of jobless males from the estimation. {Copyright 2000 Elsevier Science Inc. All rights reserved}