Income Unfairness and Occupational Choice

Furukawa, Yosuke (2016): Income Unfairness and Occupational Choice.

Abstract

In this paper, we reassess labor-market adjustment using an indicator of occupational income unfairness (OIU) that shows whether workers are paid what is warranted by their effort. Although an empirically derived unfairness indicator does not necessarily reflect workers' perceived unfairness, OIU values in some occupation groups such as professionals, sales, and production have stabilized around zero over the past 24 years. This indicates the existence of a labor-market adjustment mechanism in such occupation groups. We use contribution analysis to find that the stabilization of OIU is largely explained by changing education level and work hours with the aging effect and the gender effect having only small effects on unfairness.

• Item Type: MPRA Paper
• Language: English
• Keywords: Income Inequality; Unfair Inequality; Occupational Choice
• Subjects: D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials

References

[1] Acemoglu, D. and D. Autor. ''Skills, Tasks and Technologies: Implications for Employment and Earnings." in Handbook of Labor Economics, edited by O. Ashenfelter and D. Card. Elsevier. 2011, 1043--1171.

[2] Almas, I., A. W. Cappelen, J. T. Lind, E. O. Sorensen, and B. Tungodden. ''Measuring Unfair (In)equality." Journal of Public Economics 95, 2011, 488--499.

[3] Autor, D. and D. Dorn. ''The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market." American Economic Review 103(5), 2013, 1553--1597.

[4] Autor, D. H., L. F. Katz, and M. S. Kearney. ''The Polarization of the U.S. Labor Market." America Economic Review: Papers and Proceedings 96(2), 2006, 189--194.

[5] Autor, D. H., L. F. Katz, and M. S. Kearney. ``Trends in US Wage Inequality: Revising the Revisionists." The Review of Economics and Statistics 90(2), 2008, 300--323.

[6] Autor, D. H., F. Levy, and R. J. Murnane. ''The Skill Content of Recent Technological Change: An Empirical Exploration." Quarterly Journal of Economics 118(4), 2003, 1279--1334.

[7] Cappelen, A. and B. Tungodden. ''Fairness and the Proportionality Principle." Department of Economics, Norwegian School of Economics and Business Administration. 2010.

[8] Eeckhout, J. and B. Jovanovic. ''Occupational Choice and Development." Journal of Economic Theory 147, 2012, 657--683.

[9] Goos, M. and A. Manning. ''Lousy and Lovely Jobs: The Rising Polarization of Work in Britain." Review of Economics and Statistics 89(1), 2007, 118--133.

[10] Goos, M., A. Manning, and A. Salomons. ''Job Polarization in Europe." American Economic Review: Papers and Proceedings 99(2), 2009, 58--63.

[11] Jaimovich, N., and H. E. Siu. ``The Trend Is the Cycle: Job Polarization and Jobless Recoveries.'' NBER Working Paper No. 18334, The National Bureau of Economics Research, Cambridge.

[12] Katz, L. F. and D. Autor. ''Changes in the Wage Structure and Earnings Inequality." in Handbook of Labor Economics, edited by O. Ashenfelter and D. Card. Elsevier, 1999, 1463--1555.