Decomposition of Labor Earnings Growth: Recovering Gaussianity?

Pierre Pora and Lionel Wilner

No 2019-03, Working Papers from Center for Research in Economics and Statistics

Abstract: Recent works have concluded to non-Gaussian features of labor earnings growth. We argue in this paper that it is mainly due to working hours'volatility. Using the non-parametric approach developed by Guvenen et al. (2016), we find on French data that labor earnings changes exhibit strong asymmetry as well as high peakedness. However, after decomposing labor earnings growth into wage and working time growth, the log-normality of hourly wages remains a quite plausible assumption since deviations from Gaussianity stem mainly from working time changes. The joint dynamics of hourly wages and working time help explain those deviations which relate most likely to labor supply decisions at the extensive margin.

Keywords: Labor earnings growth; non-Gaussian distributions; skewness; kurtosis. (search for similar items in EconPapers)
JEL-codes: E24 J22 J31 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2019-02-15
New Economics Papers: this item is included in nep-eur, nep-lma and nep-mac
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: A decomposition of labor earnings growth: Recovering Gaussianity? (2020)
Working Paper: A decomposition of labor earnings growth: Recovering Gaussianity? (2020)
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