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Hours Worked and the US Distribution of Real Annual Earnings 1976-2016

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Document pages: 52 pages

Abstract: We examine the impact of annual hours worked on annual earnings bydecomposing changes in the real annual earnings distribution into composition,structural and hours effects. We do so via a nonseparable simultaneous model ofhours, wages and earnings. Using the Current Population Survey for the surveyyears 1976--2019, we find that changes in the female distribution of annualhours of work are important in explaining movements in inequality in femaleannual earnings. This captures the substantial changes in their employmentbehavior over this period. Movements in the male hours distribution only affectthe lower part of their earnings distribution and reflect the sensitivity ofthese workers annual hours of work to cyclical factors.

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