NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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J. Rodrigo Fuentes

Instituto de economía
Pontificia Universidad Católica de Chile
Vicuña Mackenna 4860
Santiago, Chile 7820436
Chile
Tel: 56 2 23544306

E-Mail: rodrigo.fuentes@uc.cl
Institutional Affiliation: Pontificia Universidad Catolica de Chile

NBER Working Papers and Publications

November 2019Effort: The Unrecognized Contributor to US Income Inequality
with Edward E. Leamer: w26421
This paper provides theory and evidence that worker effort has played an important role in the increase in income inequality in the United States between 1980 and 2016. The theory suggests that a worker needs to exert effort enough to pay the rental value of the physical and human capital, thus high effort and high pay for jobs operating expensive capital. With that as a foundation, we use data from the ACS surveys in 1980 and 2016 to estimate Mincer equations for six different education levels that explain wage incomes as a function of weekly hours worked and other worker features. One finding is a decline in annual income for high school graduates for all hours worked per week. We argue that the sharp decline in manufacturing jobs forces down wages of those with high school degrees w...
 
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