Earnings and Hours Dynamics Over the Life Cycle

Christopher Busch, Fatih Guvenen and Priscilla Fialho
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Priscilla Fialho: University College London and CeMMAP

No 1109, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: We analyze the dynamics of individual labor earnings, hourly wages, and hours over the life cycle using a large panel data set that contains high quality data at the job spell level. We build on recent literature that documents deviations from lognormality—in the form of nonzero skewness and excess kurtosis—in annual earnings growth and examine the extent to which such deviations are driven by changes in by changes in wages versus changes in hours. We also examine the extent to which these deviations are driven by job changes (with or without an intervening unemployment spell) versus changes that happen during the course of a given employment spell. The broad conclusion that emerges from this analysis is that both hours and wages contribute to skewness and kurtosis of annual earnings growth, although the extent of their contribution varies by age and income level of the individuals.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed018:1109

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