Working Paper

Job separations, heterogeneity, and earnings inequality

Abstract: Changes in the fraction of workers experiencing job separations can account for> most of the increase in earnings dispersion that occurred both between, as well as> within educational groups in the United States from the mid-1970s to the mid-> 1980s. This is not true of changes in average earnings losses following job separations.> A search model with exogenous human capital accumulation calibrated> to match some selected moments of the U.S. labor market is used to measure the> effects of changes in the fraction of workers experiencing job separations (extensive> margin) versus changes in average earnings losses following job separations> (intensive margin). While both margins do well in accounting for the increase in> the college premium, only the changes in the extensive margin do well in accounting> for the increases in the variance of both the permanent and transitory> components of earnings.

Keywords: Wages; Income distribution;

https://doi.org/10.26509/frbc-wp-200910

Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Working Papers (Old Series)

Publication Date: 2009

Number: 0910