What Can Explain the Increase in Earnings Inequality Among Males?

Abstract

Increases in the inequality of earnings among male workers since the late sixties have been attributed primarily to shifts in employment from goods‐producing to service‐producing activities and the baby‐boom cohort's entry into the labor market. This paper provides empirical estimates of the magnitude of these and other potential causes of the increase in earnings inequality from 1967 to 1985. The results show that changes related to the age composition of the labor force and to the industrial composition of the labor force account for only a portion of the increase in inequality. Most of the increase in unexplained by either factor. Other contributing factors include a rise in the return to education, a change in the relationship between age and education among males, and a decline in the marriage rate among younger males.