Wage and earnings inequality between and within occupations: The role of labor supply

Andrés Erosa, Luisa Fuster, Gueorgui Kambourov, Richard Rogerson

Research output: Contribution to journalArticlepeer-review

Abstract

We document systematic differences in wage and earnings inequality both between and within occupations and show that these differences are intimately related to systematic differences in labor supply across occupations. We then develop a variant of a Roy model in which earnings are a non-linear function of hours, with the extent of this non-linearity differing across occupations. In our theory, the interplay between heterogeneity in tastes for leisure and occupational differences in non-linearities affects the sorting of workers. Moreover, this interplay is crucial to account for the facts on the distributions of hours, wages, and earnings within and across occupations.

Original languageEnglish (US)
JournalJournal of Monetary Economics
DOIs
StateAccepted/In press - 2024

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Keywords

  • Earnings inequality
  • Labor supply
  • Occupational choice
  • Wage inequality

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