Earnings inequality and skill mismatch in the U.S: 1973-2002

This paper shows that skill mismatch is a significant source of inequality in real earnings in the U.S. and that a substantial fraction of the increase in wage dispersion during the period 1973–2002 was due to the increase in mismatch rates and mismatch premia. In 2000–2002, surplus and deficit qual...

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Bibliographic Details
Published in:Journal of economic inequality 2013-06, Vol.11 (2), p.163-194
Main Author: Slonimczyk, Fabián
Format: Article
Language:English
Subjects:
Bildungsertrag
Decomposition
Development Economics
Economic Growth
Economic theory
Economics
Economics and Finance
Education
Einkommensunterschied
Hypotheses
Income distribution
Income inequality
Inequality
International Economics
Labor market
Mismatch
Overqualification
Political Science
Public Finance
Qualifications
Qualifikation
Skilled workers
Skills
Studies
Unterqualifikation
Unterwertige Beschäftigung
Ursache
USA
Wage differential
Wages & salaries
Überqualifikation
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Summary:This paper shows that skill mismatch is a significant source of inequality in real earnings in the U.S. and that a substantial fraction of the increase in wage dispersion during the period 1973–2002 was due to the increase in mismatch rates and mismatch premia. In 2000–2002, surplus and deficit qualifications taken together accounted for 4.3 and 4.6% of the variance of log earnings, or around 15% of the total explained variance. The dramatic increase in over-education rates and premia accounts for around 20 and 48% of the increase in the Gini coefficient during the 30 years under analysis for males and females respectively. The surplus qualification factor is important in understanding why earnings inequality polarized in the last decades.
ISSN:1573-8701
1569-1721
1573-8701
DOI:10.1007/s10888-011-9212-1