Inequality Overview Slides 14.662 Spring 2009 David Autor Lecture 1
Returns to Education
Goldin and Katz, 2007
Autor, Katz, Kearney (out-takes)
Overview Slides Productivity and Wage Growth Katz and Autor, 1999
Dustmann, Ludsteck and Schonberg, 2008
Real Wage Levels
Source: Robert Gordon, 2000, NBER WP 7833
Source: Robert Gordon, 2006
Source: Robert Gordon, 2006
Source: Robert Gordon, 2000, NBER WP 7752
Autor, Katz, Kearney 2008
Changes in Composition-Adjusted Male Full Time Log Weekly Wages 1963-2005 Changes in Log Real Wage Levels (1963 = 0) -.1 0.1.2.3.4.5.6 A. Males 1963 1969 1975 1981 1987 1993 1999 2005 HS Dropout Some College Post-College HS Grads Exactly College Autor 2008
Changes in Log Real Wage Levels (1963 = 0) Changes in Composition-Adjusted Female Full Time Log Weekly Wages 1963-2005 -.1 0.1.2.3.4.5.6 B. Females 1963 1969 1975 1981 1987 1993 1999 2005 HS Dropout Some College Post-College HS Grads Exactly College Autor 2008
Wage Distribution and Top Incomes
Autor, Katz, Kearney 2008
Log 90/10 wage ratio.9 1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 Overall Male 90/10 Wage Inequality 1964 1970 1976 1982 1988 1994 2000 2006 CPS March Full-Time CPS May/ORG Hourly Autor, Katz, Kearney 2008
37.5% 35.0% 32.5% 30.0% 27.5% 25.0% 22.5% 20.0% FIGURE 8 The Top Decile Wage Income Share, 1927-2006 Share (in %) 1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 Piketty and Saez 2003
Share of total income accruing to each group 25% 20% 15% 10% 5% 0% Top 1% (incomes above $382,600 in 2006) Top 5-1% (incomes between $148,400 and $382,600) Top 10-5% (incomes between $104,700 and $148,400) 1913 1918 1923 1928 1933 1938 1943 1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 FIGURE 2 Decomposing the Top Decile US Income Share into 3 Groups, 1913-2006 Piketty and Saez 2003
50% 45% 40% 35% 30% 25% FIGURE 1 The Top Decile Income Share, 1917-2006 Top 10% Income Share 1917 1922 1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1997 2002 1992 Excluding capital gains Including capital gains Piketty and Saez 2003
5.0% 4.0% 3.0% 2.0% 1.0% 0.0% FIGURE 3 The Top 0.01% Income Share, 1913-2006 Top 0.01% Income Share 1913 1918 1923 1928 1933 1938 1943 1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 Including capital gains Excluding capital gains Piketty and Saez 2003
10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Salaries Capital Income Business Income Capital Gains 1916 1921 1926 1931 1936 1941 1946 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 FIGURE 4B The Top 0.1% Income Share and Composition, 1916-2005 Piketty and Saez 2003
$100,000,000 $10,000,000 $1,000,000 FIGURE 11 CEO Pay versus Average Wage Income, 1970-2006 $1,000,000 $100,000 $10,000 Piketty and Saez 2003 CEO pay (2005 dollars) 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Average Wage Income (2005 dollars) Rank 10 CEO pay Rank 50 CEO pay Rank 100 CEO pay Top 100 CEOs average pay Salary+Bonus rank 10 Average Salary (right scale)
25% 20% 15% 10% 5% 0% 1916 1920 1924 1928 1932 1936 1940 1944 1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 FIGURE 7A The Top 0.1% Wealth Share in the United States, 1916-2000 Kopczuk and Saez 2004 Wealth Share
12% 11% 10% United States France United Kingdom 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 1913 1918 1923 1928 1933 1938 1943 1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 share (in %) FIGURE 12 Top 0.1% Income Shares in the U.S., France, and the U.K.,1913-2006 Piketty and Saez 2006 NBER WP 11955
Saez and Veall 2005
Saez and Veall 2005
Saez and Veall 2005
Saez and Veall 2005
Piketty and Saez 2006 NBER WP 11955
Dustmann, Ludsteck and Schonberg, 2008
Dustmann, Ludsteck and Schonberg, 2008
Polarization
Autor and Dorn 2008a
Lemieux, 2007
Hourly wage ratio 1.8 1.9 2 2.1 2.2 2.3 Ratios of 90th, 50th and 10th Percentile Real Hourly Earnings, 1974-2004 1974 1979 1984 1989 1994 1999 2004 90/50 (3 Year Moving Avg.) 50/10 (3 Year Moving Avg.) Autor, Katz, Kearney 2006
Autor, Katz, Kearney 2008
Autor, Katz, Kearney 2008
Real Log Wage Changes by Wage Percentile 1980-1990 and 1990-2000 Log real earnings change -.05 0.05.1.15 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 pctile Wage Percentile 1980-1990 1990-2000 Autor and Dorn 2008a
Smoothed Changes in Employment by Occupational Skill Percentile 1980-2005 100 x Change in Employment Share -.1 -.05 0.05.1.15 0 20 40 60 80 100 Skill Percentile (Ranked by Occupational Mean Wage) 1980-1990 1990-2005 Autor and Dorn 2008a
Real Log Wage Changes by Wage Percentile 1980-1990 and 1990-2000 Smoothed Changes in Employment by Occupational Skill Percentile 1980-2005 Log real earnings change -.05 0.05.1.15 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 pctile Wage Percentile 100 x Change in Employment Share -.1 -.05 0.05.1.15 0 20 40 60 80 100 Skill Percentile (Ranked by Occupational Mean Wage) 1980-1990 1990-2000 1980-1990 1990-2005 Autor and Dorn 2008a
Goos and Manning, 2007
Dustmann, Ludsteck and Schonberg, 2008
Goos, Manning and Salomons 2009
Goos, Manning and Salomons 2009
Residual Inequality
Residual Male 90/10 Hourly Wage Inequality Log 90/10 wage ratio.85.95 1.05 1.15 1.25 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 CPS March CPS May/ORG Autor, Katz, Kearney 2005 NBER WP #11628
Residual Male 90/50 Hourly Wage Inequality Log 90/50 wage ratio.4.45.5.55.6.65 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 CPS March CPS May/ORG Autor, Katz, Kearney 2005 NBER WP #11628
Residual Male 50/10 Hourly Wage Inequality Log 50/10 wage ratio.35.4.45.5.55.6.65.7 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 CPS March CPS May/ORG Autor, Katz, Kearney 2005 NBER WP #11628
Log 90/10 wage ratio.85.95 1.05 1.15 1.25 Residual Female 90/10 Hourly Wage Inequality 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 CPS March CPS May/ORG Autor, Katz, Kearney 2005 NBER WP #11628
Residual Female 90/50 Hourly Wage Inequality Log 90/50 wage ratio.4.45.5.55.6.65 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 CPS March CPS May/ORG Autor, Katz, Kearney 2005 NBER WP #11628
Residual Female 50/10 Hourly Wage Inequality Log 50/10 wage ratio.35.4.45.5.55.6.65.7 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 CPS March CPS May/ORG Autor, Katz, Kearney 2005 NBER WP #11628
Earnings Instability
Gottschalk and Moffit 1994
Gottschalk and Moffit 1994
Gottschalk and Moffit 1994
Gender and Race Gaps
Goldin, 2006 Goldin, 2006
Goldin, 2006
Mulligan and Rubinstein 2006 Mimeo
Goldin, 2006
Goldin, 2006
Goldin, 2006
Mulligan and Rubinstein, forthcoming
O Neill and O Neill 2005 NBER WP 11240
Western and Petit, 2004
Western and Petit, 2004
Models of Wage Differentials
TABLE I Levels and Changes in the Educational Composition of Employment and the College+/High School Wage Premium, 1940-2000 A. Full-Time Equivalent Employment Shares by Education Level (in percent) and Log College+/High School Wage Premium High School High School Some College College Log College+/ Dropouts Graduates College Graduates Equivalents HS Wage 1940 Census 67.9 19.2 6.5 6.4 9.6.498 1950 Census 58.6 24.4 9.2 7.8 12.4.313 1960 Census 49.5 27.7 12.2 10.6 16.7.396 1970 Census 35.9 34.7 15.6 13.8 21.6.465 1980 Census 20.7 36.1 22.8 20.4 31.8.391 1980 CPS 19.1 38.0 22.0 20.9 31.9.356 1990 CPS 12.7 36.2 25.1 26.1 38.6.508 1990 Census 11.4 33.0 30.2 25.4 40.6.549 Feb. 90 CPS 11.5 36.8 25.2 26.5 39.1.533 2000 CPS 9.2 32.4 28.7 29.7 44.1.568 Source: Autor, Katz, Krueger 1998 (updated to 2000)
Source: Katz and Murphy 1992
Log Relative Supply of College/Non-College Labor, 1963-2003 Log Relative Supply Index -.9 -.6 -.3 0.3 1982 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 Autor, Katz, Kearney 2005
A. Detrended College-High School Wage Differential and Relative Supply, 1963-2005 Log Points -.15 -.1 -.05 0.05.1.15 1963 1969 1975 1981 1987 1993 1999 2005 Detrended Wage Differential Detrended Relative Supply Source: Autor, Katz, Kearney, 2008
B. Katz-Murphy Prediction Model for the College-High School Wage Gap Log Wage Gap.35.45.55.65.75 1963 1969 1975 1981 1987 1993 1999 2005 Observed CLG/HS Gap Katz-Murphy Predicted Wage Gap: 1963-1987 Trend Source: Autor, Katz, Kearney 2008
Goldin and Katz 2007
Goldin and Katz 2007
Goldin and Katz 2007
International Comparisons of Wage Inequality
Source: Blau and Kahn, ReStat 2005
Source: Blau and Kahn, ReStat 2005
Source: Leuven, Oosterbeek and van Ophem 2004
Source: Leuven, Oosterbeek and van Ophem 2004
Source: Leuven, Oosterbeek and van Ophem 2004
Source: Leuven, Oosterbeek and van Ophem 2004