Discussion Paper

Understanding Earnings Dispersion

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;

JEL Classification: E2; J00;

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Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Liberty Street Economics

Publication Date: 2015-11-02

Number: 20151102