Understanding Earnings Dispersion

Fatih Karahan

No 20151102, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: How much someone earns is an important determinant of many significant decisions over the course of a lifetime. Therefore, understanding how and why earnings are dispersed across individuals is central to understanding dispersion in a wide range of areas such as durable and non-durable consumption expenditures, debt, hours worked, and even health. Drawing on a recent New York Fed staff report \\"What Do Data on Millions of U.S. Workers Reveal about Life-Cycle Earnings Risks?\\", this blog post investigates the nature of earnings inequality over a lifetime. It finds that earnings are subject to significant downside risk and that such risk contributes substantially to overall earnings dispersion.

Keywords: labor market risk; earnings dispersion (search for similar items in EconPapers)
JEL-codes: E2 J00 (search for similar items in EconPapers)
Date: 2015-11-02
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