Labor Supply Decisions, Human Capital Attributes, and Inequality in the Size Distribution of Earnings in the U.S., 1952-81

This paper analyzes the impact of human capital and labor force variables and macroeconomic growth measures on inequality in the size distribution of earnings for the United States. Our technique utilizes a beta distribution of the second kind to approximate the distribution of earnings. We derive a measure of inequality that depends solely on the parameters of the beta distribution and that links human capital, labor force, and macroeconomic variables to changes in the parameters of the beta distribution. We then relate the changing parameters of the beta distribution to changes in the degree of inequality in the marginal distribution of earnings.