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Earnings inequality and skill mismatch in the U.S.: 1973–2002

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  • Fabián Slonimczyk
Abstract
This paper shows that skill mismatch is a significant source of inequality in real earnings in the U.S. and that a substantial fraction of the increase in wage dispersion during the period 1973–2002 was due to the increase in mismatch rates and mismatch premia. In 2000–2002, surplus and deficit qualifications taken together accounted for 4.3 and 4.6% of the variance of log earnings, or around 15% of the total explained variance. The dramatic increase in over-education rates and premia accounts for around 20 and 48% of the increase in the Gini coefficient during the 30 years under analysis for males and females respectively. The surplus qualification factor is important in understanding why earnings inequality polarized in the last decades. Copyright Springer Science+Business Media, LLC. 2013

Suggested Citation

  • Fabián Slonimczyk, 2013. "Earnings inequality and skill mismatch in the U.S.: 1973–2002," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 11(2), pages 163-194, June.
    • Handle: RePEc:kap:jecinq:v:11:y:2013:i:2:p:163-194
    DOI: 10.1007/s10888-011-9212-1
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    Cited by:

    1. Xiangbo Liu & Theodore Palivos & Xiaomeng Zhang, 2017. "Immigration, Skill Heterogeneity, And Qualification Mismatch," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1231-1264, July.
    2. Richard Holt, 2020. "The Costs of Mismatch," Edinburgh School of Economics Discussion Paper Series 298, Edinburgh School of Economics, University of Edinburgh.
    3. Slonimczyk, Fabián & Skott, Peter, 2012. "Employment and distribution effects of the minimum wage," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 245-264.
    4. Cuadras-Morató Xavier & Mateos-Planas Xavier, 2013. "Overeducation and skill-biased technical change," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 105-122, September.
    5. Alexander Ugarov, 2019. "Talent Misallocation across Countries: Evidence from Educational Achievement Tests," 2019 Meeting Papers 1466, Society for Economic Dynamics.
    6. Salverda, Wiemer & Checchi, Daniele, 2014. "Labour-Market Institutions and the Dispersion of Wage Earnings," IZA Discussion Papers 8220, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Skill mismatch; Earnings inequality; Shapley value decomposition; J31;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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