Occupation and Growing Wage Inequality in the United States,

Transcription

1 Occupation and Growing Wage Inequality in the United States, PRC-Brown Bag ä ù Changhwan Kim Department of Sociology University of Texas at Austin Feb 4, p. 1/43

2 Presentation about Fact Finding: What is the relation between occupation and wage Inequality? 3. Causality Study: Why inequality is growing? - p. 2/43

3 Question Inequality and Occupation Importance of Occupation Occpuation: New Attention 1. Inequality has been growing during last 25 years in the United States (as well as most other developed countries). 2. Occupation has been the single most important unit of analysis in the studies of stratification and inequality in sociology. 3. Relation between occupation and growing inequality is widely unknown. - p. 3/43

4 Question Occupation has been the single most important unit of analysis in sociology. Inequality and Occupation Importance of Occupation Occpuation: New Attention Marx Durkheim Conflict : Wright (1984) Functional : Status Attainment Treiman Constancy (Hout 2003) - p. 4/43

5 Question A new attention on occupation in the studies of social stratification recently. Inequality and Occupation Importance of Occupation Occpuation: New Attention Grusky and Sørensen (1998, AJS): Possible remedy of the ongoing retreat from class analysis Disaggregate structuration" Weeden (2002, AJS): Detail occupation is a promising complement to individualistic explanations of earnings inequality." Grusky and Sørensen (1998, AJS): Does disaggregation greatly increases the explanatory power of class models?" - p. 5/43

6 Explanatory Power of Occupation on Wage Explanation Power of Occupation 1 Explanation Power of Occupation 2 Wage Inequality Between Within Inequality Where Inequality is Growing Meanwage and Inequality Social Scientists Mean Wage and Inequality Summary: Occupation and Inequality Change of R square Occupation. Industry Education Year: , , Wage i = α + β j OCC j + ε i (Y-axis in graph is R 2 ) - p. 6/43

7 Explanatory Power of Occupation on Wage Occupation. Occupation: BA+ Only Occupation: HSG Only Explanation Power of Occupation 1 Explanation Power of Occupation 2 Wage Inequality Between Within Inequality Where Inequality is Growing Meanwage and Inequality Social Scientists Mean Wage and Inequality Summary: Occupation and Inequality Change of R square Year: , , Total, Among BA+, Among HSG - p. 7/43

8 Growth of Hourly Wage Inequality Explanation Power of Occupation 1 Explanation Power of Occupation 2 Wage Inequality Between Within Inequality Where Inequality is Growing Meanwage and Inequality Social Scientists Mean Wage and Inequality Summary: Occupation and Inequality Gini Inequality Index Year - p. 8/43

9 Between- & Within- Occupational Inequality Explanation Power of Occupation 1 Explanation Power of Occupation 2 Wage Inequality Between Within Inequality Where Inequality is Growing Meanwage and Inequality Social Scientists Mean Wage and Inequality Summary: Occupation and Inequality Theil Index % fr % fr Total Between Within % of Within (.636) Total Between Within % of Within (.623) (.380) Total Between Within % of Within (.647) (.703) (.828) - p. 9/43

10 Where is Inequality Growing? No matter what is unit of measurement: Hourly Wage, Annual Income, Household Income. Explanation Power of Occupation 1 Explanation Power of Occupation 2 Wage Inequality Between Within Inequality Where Inequality is Growing Meanwage and Inequality Social Scientists Mean Wage and Inequality Summary: Occupation and Inequality Everywhere: Universal Phenomenon 1. No matter which industry 2. No matter what educational level 3. No matter which gender 4. No matter which race Within Group Inequality > Between Group Inequality Different Inputs, but the Same? - p. 10/43

11 Change of Mean Wage and Ineq. within Occ. Explanation Power of Occupation 1 Explanation Power of Occupation 2 Wage Inequality Between Within Inequality Where Inequality is Growing Meanwage and Inequality Social Scientists Mean Wage and Inequality Summary: Occupation and Inequality Mean Wage Total Decrease No Change Increase Decrease (.123) (.096) (.011) (.229) Ineq- No Change uality (.103) (.088) (.100) (.291) Increase (.059) (.254) (.167) (.480) Total (.285) (.438) (.278) (1.000) (1) INEQ jt = β 0j + β 1j Y EAR + ε jt (331 regressions) (2) MEANWAGE jt = β 0j + β 1j Y EAR + ε jt (331 regressions) Decrease or Increase: significant β 1j at α =.05 Number in Table: number of occupational categories Number in ( ): % share of workers in p. 11/43

12 We, Social Science Teachers? One of the fastest inequality growing occupations. Explanation Power of Occupation 1 Explanation Power of Occupation 2 Wage Inequality Between Within Inequality Where Inequality is Growing Meanwage and Inequality Social Scientists Mean Wage and Inequality Summary: Occupation and Inequality Ranked 42nd among 331 occupations. Gini Index: from in to in p. 12/43

13 Change of Mean Wage and Ineq. within Occ. from 1983 to 2002 Explanation Power of Occupation 1 Explanation Power of Occupation 2 Wage Inequality Between Within Inequality Where Inequality is Growing Meanwage and Inequality Social Scientists Mean Wage and Inequality Summary: Occupation and Inequality Change of Mean Wage Change of Gini Index Point in Graph: Occupation - p. 13/43

14 Change of Mean Hourly Wage and Wage Inequality, between and Managerial Occ. Professional Technicians Explanation Power of Occupation 1 Explanation Power of Occupation 2 Wage Inequality Between Within Inequality Where Inequality is Growing Meanwage and Inequality Social Scientists Mean Wage and Inequality Summary: Occupation and Inequality Change of Mean Wage Sales Adm Support Service Skilled Labor Unskilled Labor Change of Gini Index Point in Graph: Occupation - p. 14/43

15 Summary: Occupation and Inequality Explanation Power of Occupation 1 Explanation Power of Occupation 2 Wage Inequality Between Within Inequality Where Inequality is Growing Meanwage and Inequality Social Scientists Mean Wage and Inequality Summary: Occupation and Inequality 1. Explanatory power of occupation on hourly wage has declined over last two decades 2. Within-occupational-inequality has grown faster than between-occupational-inequality. 3. Heterogeneity within an occupation has increased and homogeneity in an occupation has diminished. 4. But increasing within-occupational-inequality is not universal across occupation, there is variability across occupation. - p. 15/43

16 Why inequality has increased over time? 1. Influx of Female Workers 2. Deindustrialization (Declining Manufacturing Sector) 3. Privatization (Declining Public Sector) 4. Skill Biased Technological Change (College Premium) 5. Union Effect (Declining Union Membership) 6. Insecure Employment Relation (Part Time) 7. Organizational Culture Change - p. 16/43

17 Stage 1 Stage 2 Stage 3 Stage 1: 1. Raw : Current Population Survey-MORG, Combine each three consecutive years data (18 periods) 2. Population: Aged 18-65, Employed, Both male and female 3. Hourly Wage: Earn at least 50cents per hour. Top Coding: Log Normal Distribution, Inflation: Adjusted by CPI-X. 4. Occupation: At least 100 samples per each year, otherwise record. 331 occupations. Stage 2: Stage 3: - p. 17/43

18 Stage 1: Stage 1 Stage 2 Stage 3 Stage 2: 1. Inequality: 331 occupations within-occupational-inequality. Gini Index, Entrophy Indexes, Atkinson Indexes (7 indexes) 2. Meanwage: 331 occupations mean wage 3. Explanatory Variables: 331 occupations characteristics (ex. % of female, % of BA+) 4. Repeat 18 periods Stage 3: - p. 18/43

19 Stage 1: Stage 1 Stage 2 Stage 3 Stage 2: Stage 3: 1. Merge them occupation 18 periods = 5,958 cases - p. 19/43

20 Stage 1 Stage 2 Stage 3 Year Occ Inequality Meanwage Female : : : : p. 20/43

21 Multilevel Growth OLS INEQ jt = α + βt t + ε jt (1) Multilevel Basic Full Assumption INEQ jt = α j + β j T t + ε jt α j = α + u 1j β j = β + u 2j (2) Multilevel in Composite Form INEQ jt = α + βt t + [u 1j + u 2j T t + ε jt ] (3) where j occupation, t time. - p. 21/43

22 Multilevel Growth INEQ jt = α j + β j T t + γx jt + δ(t t X j. ) + ζ X j. + ε jt (4) Basic Full Assumption T t : Time t centered to initial value ( ). X jt : change of proportion. T t X j. : interaction of mean of explanatory variables over time with time itself. Xj. : group mean of each explanatory variable. γ: effect of independent variable by 1% point change. δ: change of the effect of explanatory variable itself without compositional change - p. 22/43

23 Multilevel Growth INEQ jt = [α + βt t + γx jt + δ(t t X j. ) + ζ X j. ] + [u 1j + u 2j T t + ε jt ] (5) Basic Full Assumption MEANWAGE jt = [α + βt t + γx jt + δ(t t X j. ) + ζ X j. ] + [u 1j + u 2j T t + ε jt ] (6) ε jt N(0, σ 2 εσ) and u 1j N u 2j 0, 0 σ2 1 σ 12 σ 21 σ2 2 (7) where Σ is assumed to be two band toeplitz. j occupation, t time. - p. 23/43

24 Net Effect of Predictors on Within Inequality Net Effect on Inequality Net Effect on MeanWage Estimated Wth Ineq Change Summary Variance Inequality Change % Increase of Proportion d(ineq) w/o d(%) for 20 years Fem Mf Pub Part Union BA+ Div Fem Mf Pub Part Union BA+ Div Variables INEQ jt = α j + β j T t + γx jt + δ(t t X j. ) + ζ X j. + ε jt - p. 24/43

25 Net Effect of Predictors on Mean Wage Net Effect on Inequality Net Effect on MeanWage Estimated Wth Ineq Change Summary Variance Mean Wage Change % Increase of Proportion d(ineq) w/o d(%) for 20 years Fem Mf Pub Part Union BA+ Div Fem Mf Pub Part Union BA+ Div Variables Meanwage jt = α j + β j T t + γx jt + δ(t t X j. ) + ζ X j. + ε jt - p. 25/43

26 Estimated Within Inequality Change Net Effect on Inequality Net Effect on MeanWage Estimated Wth Ineq Change Summary Variance Variable Coefficient % Change btw Inequality Variable Estimate and Change ( Sig.) Female BA Edu.Div Public PartTime Union Manuf YEAR BA YEAR Edu.Div YEAR Public YEAR PartTime YEAR Union YEAR Manuf Total Inequality Change (Actual Average Inequality Change btw and 00-02) (1.6400) - p. 26/43

27 Hypothesis and Result: Within Occupational Inequality Net Effect on Inequality Net Effect on MeanWage Estimated Wth Ineq Change Summary Variance Hypothesis Result Amount Female + small Manuf small Public moderate Part + + small Union %p + big Within + BA+ %p + big Within + + Edu.Div. %p + small Within + - p. 27/43

28 Hypothesis and Result: Mean Wage Net Effect on Inequality Net Effect on MeanWage Estimated Wth Ineq Change Summary Variance Hypothesis Result Amount Female small Manuf + + moderate Public moderate Part small Union %p + + big Within / BA+ %p + + big Within + + Edu.Div. %p / big Within / - p. 28/43

29 Explanatory Power of Predictor on Variation Variation of Inequality Growth Variation of Mean Wage Growth Net Effect on Inequality Net Effect on MeanWage Estimated Wth Ineq Change Summary Variance % Explained Edu Union Sector Part Female Edu Union Sector Part Female Variables % Explained: r 2 = (σ 2,Tested t σ 2,Full t )/σ 2,Base t. Tested : Full without tested predictors. - p. 29/43

30 : Between Occupational Inequality Explained well by current hypothesis. 1. Education, Union, and Public Sector 2. Female participation reduces inequality. -between -within Thank you - p. 30/43

31 : Within Occupational Inequality -between -within Thank you Facts 1. Current Hypotheses do not fit well. 2. Not % Change of union, but change within union members. 3. Not widening gap between different educational level, but change within the same education. 4. Lagged. First between-occupational change in 80s, then within-occupational change in 90s. 5. % increase of public sector reduces inequality. 6. (Moving southern area increases inequality.) Suggestion Future Research - p. 31/43

32 : Within Occupational Inequality Facts -between -within Thank you Suggestion: Organizational Culture Change 1. Related with skill change. Lagged. 2. Emphasis on versatile abilities. 3. Know individual productivity better than before. 4. Accept individual differences. Future Research - p. 32/43

33 : Within Occupational Inequality Facts Suggestion -between -within Thank you Future Research: Increased horizontal mobility among high skill workers? - p. 33/43

34 Thank you. -between -within Thank you - p. 34/43

35 Inequality Index Theil Index (Entrophy Index) Inequality Decomposition Error Structure of Multilevel Theil = 1 N N i=1 y i ȳ ln y i ȳ They can be additively decomposed as GE = GE w + GE b, where GE w refers to within-group-inequality, and GE b refers to between-group-inequality. Within-group-inequality is weighted sum of each subgroup inequality, T j and between-group-inequality is derived assuming every person within a given subgroup j received its mean income, y j. Theil index is decomposed as; Theil = k y k ȳ T k + k y k ȳ ln y k/ȳ n/n (8) (9) where N refers to number of persons, y i refers to wage of individual i, ȳ refers to the grand mean and y k refers to mean wage of subgroup k. - p. 35/43

36 Error Structure of Multilevel Inequality Decomposition Error Structure of Multilevel E(εε ) = ε jt N(0, σ 2 εσ) (10),where σ 2 Σ 0 0 σ 2 σ σ 2 Σ 0, σ 2 σ 1 σ 2 σ 1 0 Σ =. 0 σ 1 σ 2 σ σ 2 Σ 0 0 σ 1 σ 2 u 2j u 1j N 0, 0 σ2 1 σ 12 σ 21 σ2 2 (11) E(εu 1) = E(εu 2) = 0 (12) - p. 36/43

37 Net Effect of Female Hypothesis Inequality % Female, Inequality + Mean Wage % Female, Wage of LWO % Female, Wage of HWO + Female Deindustrialization Public Sector Part Time Union Education LWO: Low-Wage-Occupation ( µ σ) HWO: High-Wage-Occupation ( µ + σ) Result Inequality % Female *** Mean Wage % Female *** % Female LowWage Insignificant % Female HighWage *** - p. 37/43

38 Net Effect of Manufacturing Sector Hypothesis Inequality % Manufacture, Inequality Within Manufacture No Change Mean Wage % Manufacture, Mean Wage + Mean Wage of Manufacture Female Deindustrialization Public Sector Part Time Union Education Result Inequality % Manuf Insig. Year Manuf ** Mean Wage % Manuf *** Year Manuf *** - p. 38/43

39 Net Effect of Public Sector Hypothesis Inequality % Public Sector, Inequality Within Public Sector No Change Mean Wage % Public Sector, Mean Wage + Mean Wage of Public Sector No Change Female Deindustrialization Public Sector Part Time Union Education Result Inequality % Public Sector *** Year Public * Mean Wage % Public Sector *** % Public LowWage.0666 *** Year Public Insig. - p. 39/43

40 Net Effect of Part Time Worker Hypothesis Inequality % Part Time, Inequality + Within Part Time Workers No Change Mean Wage % Part Time, Mean Wage Mean Wage of Part Time (No Change) Female Deindustrialization Public Sector Part Time Union Education Result Inequality % Part Time.0410 *** % Part Time Sales ** % Part Time Service *** Year PartTime Insig. Mean Wage % Part Time *** % Part Time HighWage.0696 *** Year PartTime Insig. - p. 40/43

41 Net Effect of Union Hypothesis Inequality Spillover: % Union, Inequality Barrier: % Union, Inequality + Within Union Workers No Change Mean Wage % Union, Mean Wage + Mean Wage of Union Workers (No Change) Female Deindustrialization Public Sector Part Time Union Education Result Inequality % Union.0294 ** Year Union.0036 *** Mean Wage % Union.0847 *** % Union LowWage *** Year Union ** - p. 41/43

42 Net Effect of Education Hypothesis Inequality % BA+, Inequality + % EduDiv, Inequality + Within BA+ Workers + At the same EduDiv over Time + Mean Wage % BA+, Inequality + % EduDiv, Inequality (No Change) Within BA+ Workers + At the same EduDiv over Time (No Change) Female Deindustrialization Public Sector Part Time Union Education - p. 42/43

43 Net Effect of Education Result Inequality % BA Insig. % EduDiv.0078 Insig. Year BA *** Year EduDiv.0006 Insig. Mean Wage % BA *** % EduDiv.0085 Insig. Year BA *** Year EduDiv *** Female Deindustrialization Public Sector Part Time Union Education - p. 43/43