Hours worked and the U.S. distribution of real annual earnings 1976-2019

Abstract

We examine the impact of annual hours worked on annual earnings bydecomposing changes in the real annual earnings distribution intocomposition, structural and hours effects. We do so via a nonseparablesimultaneous model of hours, wages and earnings. Using the CurrentPopulation Survey for the survey years 1976--2019, we find that changes inthe female distribution of annual hours of work are important in explainingmovements in inequality in female annual earnings. This captures thesubstantial changes in their employment behavior over this period. Movementsin the male hours distribution only affect the lower part of their earningsdistribution and reflect the sensitivity of these workers' annual hours ofwork to cyclical factors