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- Title
Demographic or labour market trends: What determines the distribution of household earnings in OECD countries?
- Authors
Chen, Wen-Hao; Förster, Michael; Llena-Nozal, Ana
- Abstract
This article assesses various underlying driving factors for the evolution of household earnings inequality for 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.
- Publication
OECD Journal: Economic Studies, 2013, Vol 2013, Issue 1, p179
- ISSN
1995-2848
- Publication type
Article
- DOI
10.1787/eco_studies-2013-5k43jt5vcdvl