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IZA Discussion Paper No. 12044
December 2018
Decomposing Real Wage Changes in the United States

We employ CPS data to analyze the sources of hourly real wage changes in the United States for 1976 to 2016 at various quantiles of the wage distribution. We account for the selection bias from the annual hours of work decision by developing and implementing an estimator for nonseparable selection models with censored selection rules. We then decompose wage changes into composition, structural and selection effects. Composition effects have increased wages at all quantiles but the patterns of wage changes are generally determined by the structural effects. Evidence of changes in the selection effects only appear at lower quantiles of the female wage distribution. The combination of these various components produce a substantial increase in wage inequality. This increase has been exacerbated by the changes in females' working hours.

Kommunikation
Mark Fallak
mark.fallak@liser.lu
+352 585-855-526
World of Labour
Olga Nottmeyer
olga.nottmeyer@liser.lu
+352 585-855-501
Netzwerkkoordination
Christina Gathmann
christina.gathmann@liser.lu

Das IZA@LISER-Netzwerk ist eine weltweite Gemeinschaft für exzellente Forschung in der Arbeitsmarktökonomie und angrenzenden Fachgebieten. Nach dem Wechsel von Bonn wird das Netzwerk nun am Luxembourg Institute of Socio-Economic Research (LISER) koordiniert.

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