ChangHwan Kim

The Rise of Intra-Occupational Wage Inequality in the United States, 1983 to 2002

Wage inequality has increased dramatically in the United States since the 1980s. This article investigates the relationship between this trend and occupational structure measured at the three-digit level. Using the Current Population Survey from 1983 to 2002, we find that the direct association between occupations and wage inequality declined over this period as within-occupational inequality grew faster than betweenoccupational inequality. We estimate multilevel growth models using detailed occupational categories as the unit of analysis to assess how the characteristics of occupations affect changes in mean wages and levels of wage inequality across this time period. The results indicate that changes in mean wages across occupations vary depending on the characteristics of individuals in those occupations and that intraoccupational inequality is difficult to predict using conventional labor force data. These findings seem largely inconsistent with the common sociological view of occupation as the most fundamental feature of the labor market. Correspondingly, a more comprehensive approach—one that incorporates the effects of organizational variables and market processes on rising wage inequality in the New Economy—is warranted.

Have Asian American Men Achieved Labor Market Parity with White Men

We use the 2003 National Survey of College Graduates to investigate earnings differentials between white and Asian American men. We extend prior literature by disaggregating Asian Americans by their immigration status in relation to the U.S. educational system, and by accounting for the effects of field of study and college type. Net of the latter variables and other demographic controls, native-born Asian American men have 8 percent lower earnings than do measurably comparable white men. Our findings show that Asian American men who were schooled entirely overseas have substantial earnings disadvantages, while Asian American men who obtained their highest degree in the United States but completed high school overseas have an intermediate earnings disadvantage. Net of the control variables, including region of residence, only 1.5-generation Asian American men appear to have reached full parity with whites. Most Asian American men lag at least slightly behind white men in terms of full equality in the labor market net of the measured covariates in our statistical models. No one theoretical approach seems able to explain our findings; instead, we suggest the relevance of several perspectives, including the racialized hierarchy view, the demographic heterogeneity approach, and assimilation theory.

Response Error in Earnings An Analysis of the Survey of Income and Program Participation Matched With Administrative Data

This article examines the problem of response error in survey earnings data. Comparing workers’ earnings reports in the U.S. Census Bureau’s Survey of Income and Program Participation (SIPP) to their detailed W-2 earnings records from the Social Security Administration, we employ ordinary least squares (OLS) and quantile regression models to assess the effects of earnings determinants and demographic variables on measurement errors in 2004 SIPP earnings in terms of bias and variance. Results show that measurement errors in earnings are not classical, but mean-reverting. The directions of bias for subpopulations are not constant, but varying across levels of earnings. Highly educated workers more correctly report their earnings than less educated workers at higher earnings levels, but they tend to overreport at lower earnings levels. Black workers with high earnings underreport to a greater degree than comparable whites, while black workers with low earnings overreport to a greater degree. Some subpopulations exhibit higher variances of measurement errors than others. Blacks, Hispanics, high school dropouts, part-year employed workers, and occupation “switchers” tend to misreport—both over- and underreport—their earnings rather than unilaterally in one direction. The implications of our findings are discussed.

Is Rising Earnings Inequality Associated with Increased Exploitation? Evidence for U.S. Manufacturing Industries, 1971–1996

Is the trend towards rising earnings inequality associated with increased exploitation? The authors investigate exploitation among workers using data for manufacturing industries. Defined as the underpayment of earnings relative to productivity as evaluated in the market, exploitation is measured for various groups of employees. The results indicate significant levels of exploitation among women, Hispanics, African Americans, and blue-collar workers. By contrast, employees who are overpaid relative to their productivities include middle-aged workers, older workers, and managers. Additional findings suggest that the increase in inequality in recent years has been associated with heightened exploitation due to the underpayment of workers in the lowest two quintiles of the earnings distribution, while workers in the upper two quintiles have become increasingly overpaid. Rising earnings inequality in the manufacturing sector thus appears to be associated with increased exploitation when the latter is measured as the underpayment of market value to workers. A related analysis by Liu, Sakamoto, and Su also investigates patterns of economic underpayment and overpayment but does not link them explicitly to inequality in the distribution of earnings and how the level of inequality has been increasing in recent years.

Field of Study in College and Lifetime Earnings in the United States

Our understanding about the relationship between education and lifetime earnings often neglects differences by field of study. Utilizing data that match respondents in the Survey of Income and Program Participation to their longitudinal earnings records based on administrative tax information, we investigate the trajectories of annual earnings following the same individuals over 20 years and then estimate the long-term effects of field of study on earnings for U.S. men and women. Our results provide new evidence revealing large lifetime earnings gaps across fields of study. We show important differences in individuals’ earnings trajectories across different stages of the work life by field of study. In addition, the gaps in 40-year (i.e., ages 20 to 59) median lifetime earnings among college graduates by field of study are larger, in many instances, than the median gap between high school graduates and college graduates overall. We also find significant variation among graduate degree holders. Our results uncover important similarities and differences between men and women with regard to the long-term earnings differentials associated with field of study. In general, these findings underscore field of study as a critical dimension of horizontal stratification in educational attainment.

Education and Lifetime Earnings in the United States

Differences in lifetime earnings by educational attainment have been of great research and policy interest. Although a large literature examines earnings differences by educational attainment, research on lifetime earnings—which refers to total accumulated earnings from entry into the labor market until retirement—remains limited because of the paucity of adequate data. Using data that match respondents in the Survey of Income and Program Participation to their longitudinal tax earnings as recorded by the Social Security Administration, we estimate the 50-year work career effects of education on lifetime earnings for men and women. By overcoming the purely synthetic cohort approach, our results provide a more realistic appraisal of actual patterns of lifetime earnings. Detailed estimates are provided for gross lifetime earnings by education; net lifetime earnings after controlling for covariates associated with the probability of obtaining a bachelor’s degree; and the net present 50-year lifetime value of education at age 20. In addition, we provide estimates that include individuals with zero earnings and disability. We also assess the adequacy of the purely synthetic cohort approach, which uses age differences in earnings observed in cross-sectional surveys to approximate lifetime earnings. Overall, our results confirm the persistent positive effects of higher education on earnings over different stages of the work career and over a lifetime, but also reveal notably smaller net effects on lifetime earnings compared with previously reported estimates. We discuss the implications of these and other findings.

Assessing the Consequences of Declining Unionization and Public-Sector Employment A Density-Function Decomposition of Rising Inequality From 1983 to 2005

This study defines four sectors of labor markets based on union membership and public-sector employment. Using the current population surveys from 1983 to 2005, the authors decompose the growth of wage inequality into compositional changes, group-specific mean changes, and group-specific variance changes. This approach allows one to more precisely identify and assess the immediate intervening processes associated with rising wage inequality. The findings suggest that, although the increase of the demand for the skilled workers does play a significant role, the recent increase in wage dispersion cannot be fully explained by skill-biased technological change. This study’s analysis instead indicates that the two main sources of increasing inequality include the “nonunion private sectorization” of all sectors and the reduction in the sizes of the institutionally protected market sectors. Rising inequality seems to be because of the dismantling of the institutions that formerly insulated a large proportion of workers from direct engagement with market forces as the immediate wage-setting mechanism.

Decomposing the Change in the Wage Gap Between White and Black Men Over Time, 1980-2005: An Extension of the Blinder-Oaxaca Decomposition Method

This article extends the Blinder—Oaxaca decomposition method to the decomposition of changes in the wage gap between white and black men over time. The previously implemented technique, in which the contributions of two decomposition components are estimated by subtracting those at time 0 from the corresponding ones at time 1, can yield an untenable conclusion about the extent to which the contributions of the coefficient and endowment effects account for changes in the wage gap over time. This article presents a modified version of Smith and Welch’s (1989) decomposition method through which the sources of the change over time are decomposed into five components. The extents to which the education, age, region, metro residence, and marital status variables contribute to the rising racial wage gap between white and black men from 1980 to 2005 are estimated using the five-component detailed decomposition method and are contrasted with the results of the old simple subtraction decomposition technique. In conclusion, this article shows that changes in the racial wage gap between 1980 and 2005 result from many contradicting forces and cannot be reduced to one explanation.

Does Inequality Increase Productivity?: Evidence From U.S. Manufacturing Industries, 1979 to 1996

Wage inequality was investigated using the Current Population Survey combined with data on industrial productivity from the Center for Economic Studies of the U.S. Census Bureau. The research objective was to estimate the net effect of wage inequality on productivity in U.S. manufacturing industries from 1979 to 1996. Using fixed-effects panel models that control for unobserved differences in productivity across these industries, the results do not support the skill-biased technological-change argument, which assumes that increasing wage inequality has enhanced productivity in recent decades. In contrast, results from the regression analyses in this study clearly indicate that wage inequality has not had a positive net effect on productivity. Interpretation of these results suggests that organizational restructuring associated with the New Economy has increased labor market inequality but is less associated with increasing efficiency than is commonly assumed.

Bringing Productivity Back In: Rising Inequality and Economic Rents in the U.S. Manufacturing Sector, 1971 to 2001

Using data on earnings and productivity for U.S. manufacturing industries from 1971 to 2001, we investigate economic rents and rising income inequalities. The results suggest that rents are most significant for managers, professionals, middle-aged workers, and older workers. Conversely, negative rents are evident for women, Hispanics, single men, and blue-collar workers. The underpayment of Hispanics appears to have increased while African Americans have gone from being underpaid to being overpaid. Workers with a college degree have become overpaid (i.e., “credentialism”) while “gift-exchange” efficiency wages have declined. The marginal productivity of labor input has increased but is increasingly underpaid.