Choice, Order Statistics and the Distribution of Earnings

Michael Sattinger

Journal of Income Distribution, 1997, vol. 06, issue 1, 1-1

Abstract: This paper analyzes the distribution of earnings as being generated by workers choosing among occupations on the basis of earnings maximization. A worker’s earnings then have characteristics of an order statistic. The extension to multiple occupations leads to the revision results from A.D. Roy’s two-occupation case. An additional occupation raises expected earnings while in general reducing earnings inequality. Asymptotic results from order statistics suggest that the process of occupational choice determines a limiting distribution of earnings independently of underlying distributions of occupational abilities.

Date: 1997
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Working Paper: Choice, Order Statistics, and the Distribution of Earnings (1994)
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