Earnings Dynamics and Returns to Skills

Youngmin Park, Youngki Shin and Lance Lochner

No 166, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: In this paper, we study the role of returns to unobserved skills in the rising residual earnings inequality for the past few decades in the U.S. We identify and estimate a general model of earnings residuals that incorporates (i) changing returns to unobserved skills, (ii) changing distribution of unobserved skills, and (iii) changing volatility of earnings that is not related to skills. Using data from the PSID, we find that the returns to unobserved skills went down since the mid-1980s despite the steady increase in the residual inequality. Using a simple demand and supply framework, we show that both demand and supply factors contributed to the downward trend in the returns to skills over time.

Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2017/paper_166.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:sed017:166

Access Statistics for this paper

More papers in 2017 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().