Are younger generations better off than older ones? Can younger cohorts starting with lower real wages catch up with previous generations? Are young or old generations becoming more unequal? In the last fifteen years these questions, of great interest for the policy maker, have motivated a considerable amount of research on changes in the wage structure, with a particular emphasis on North America and the U.K. first and other countries much later (see Acemoglu, 2002, Acemoglu 2003; Card et al., 1999; Goldin and Katz, 1996; Berman et al., 1998; Blau and Khan, 1996; Katz and Murphy, 1992). While some authors have documented an increase in inequality, however measured, which cannot be accounted for by observables like education, experience, sex, and age, others have concentrated their attention on how the earnings distribution (captured by its central location or other statistics) has changed through time.
In our study we concentrate on the study of inter-generational and intra-generational patterns of earnings for Italian male dependent workers for the period 1987-2006. Using data from the Bank of Italy's Survey of Household Income and Wealth, we construct cohort-education-(macro) region-specific age profiles for mean real wages (the measure of central location here adopted) and for the 90-10 percentile differential (the inequality measure), allowing for region-specific price indexes. We verify how different cohorts have been doing comparatively and finally we test whether, with time, the (mean) returns to experience and education have increased.
Our preliminary results indicate that, for the two education groups considered, each successive generation has benefited from higher entry wages. At the same time, we find that the wage age-profiles for both education groups have become flatter so that we cannot conclude that more recent cohorts are better off than their immediate predecessors. When looking at high/low education relative wages, we find that there is only scant evidence of positive cohort profiles (i.e. that the education premium has been rising across cohorts), while we notice that the relative wage tends to increase over the life-cycle. Finally, we find that inequality tends to increase with age, while we also find evidence of across-cohort variation, in the direction of increasing inequality.
Our work is relevant under various aspects. On the one hand, it provides a clear framework in which between and within cohort comparisons are meaningful and easily interpretable. Moreover, it allows us to relate our results to those obtained by MaCurdy and Mroz (1995) and Beaudry and Green (2000) in their studies of the earning patterns of, respectively, American and Canadian workers.
BIAGI Federico;
2013-01-06
Publications Office of the European Union
JRC75887
978-92-79-27003-1,
1831-9424,
EUR 25545 EN,
OP LF-NA-25545-EN-N,
http://ipts.jrc.ec.europa.eu/publications/pub.cfm?id=5559,
https://publications.jrc.ec.europa.eu/repository/handle/JRC75887,
10.2791/99944,
