Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/95597
Authors: 
Chen, Wen-Hao
Förster, Michael
Llena-Nozal, Ana
Year of Publication: 
2013
Series/Report no.: 
LIS Working Paper Series 591
Abstract: 
This article assesses various underlying driving factors for the evolution of household earnings inequality or 23 OECD countries from the mid-1980s to the mid-2000s. There are a number of factors at play. Some are related to labour market trends - increasing dispersion of individual wages and changes in men's and women's employment rates. Others relate to shifts in household structures and family formation - more single-headed households and increased earnings correlation among partners in couples. The contribution of each of these factors is estimated using a semi parametric decomposition technique. The results reveal that marital sorting and household structure changes contributed, albeit moderately, to increasing household earnings inequality, while rising women's employment exerted a sizable equalising effect. However, changes in labour market factors, in particular increases in men's earnings disparities, were identified as the main driver of household earnings inequality, contributing between one-third and one-half to the overall increase in most countries. Sensitivity analysis applying a reversed-order decomposition suggests that these results are robust.
Subjects: 
earnings inequality
assortative mating
female labour supply
decomposition
JEL: 
D31
J12
J22
I30
Document Type: 
Working Paper
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