Yiheng Huang
Job market paper
A New Framework for Understanding Wage Inequality Change
Abstract
This paper introduces a novel framework for understanding changes in wage inequality. Departing from traditional approaches, the framework begins by analyzing the working decisions of individuals with identical observable characteristics. Utilizing a derived equilibrium condition, I present an empirical formula that estimates parameters and variables related to unobservable characteristics using observed wages and employment data. Application of this model to ASEC CPS data reveals that the framework effectively captures wage variation. Counterfactual analysis indicates that shifts in labor demand and the distribution of unobservable abilities significantly contributed to the growth in wage inequality from 1990 to 2015, with impacts varying considerably by education and occupation. Additionally, Mincer earnings regressions demonstrate improved performance when using ability prices rather than wages as the dependent variable.
Please email me if you cannot download the paper.
Other papers
Why Did College Wage Premium Growth Slow Down? An Analysis with Endogenous Supply of College Workers [working paper with Kevin K. Tsui]
Recent Flattening College Wage Premium: Demand Reversal, Polarization or Supply Change? [working paper]
City Size, Industrial Composition Change and Local Labor Market Inequality Change [working paper]
Changes in Behavior Patterns or Demographic Structure? Re-estimating the Impact of Higher Education on the Average Age of the First Marriage. Frontiers in Psychology, Vol(14), Jan 2023, pp. 1-13. With Ting Lai and Jinwu Xiong
The Influence of Parental Educational Expectations on Children’s Higher Education Attainment: Re-estimation Based on Instrumental Variables. Frontiers in Psychology, Vol(13), May 2022, pp. 1-11. With Ting Lai and Fulan Liu
Defective economic thinking: with controversy over fiat money for the special economic zone. Guizhou Social Science (Chinese), 2015, V301(1), 143-152.
5. Two problems of urban land transfer and the review of a possible solution: an analysis of the perspective of bargaining. With Jinwu Xiong. Economic Survey (Chinese), 2013, V1(6), 130-136.