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Income Unfairness and Occupational Choice

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

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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.

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