This dissertation is an empirical investigation into the distributive effects of overand under-education, defined as market outcomes such that some workers possess skills over or below those required at their jobs respectively. This type of market failure can arise in assignment and search equilibrium settings, as well as in the presence of asymmetric information regarding workers' performance on the job. The existence of permanent and sizable mismatch rates means that returns to education are depressed for over-educated workers and in ated for under-qualified workers. Thus, irreversible decisions to invest in human capital are made in a context of uncertainty regarding the exact outcomes that might arise. As in the Todaro model, where individuals decide whether to migrate to cities based on the expected values of the available alternatives, workers might decide it is worthwhile to keep investing in education even if the probability of finding appropriate employment is falling. The three chapters of the dissertation are entitled: Skill Mismatch and Earnings: A Panel analysis of the U.S. Labor Market," Earnings Inequality and Skill Mismatch in the U.S: 1973-2003," and Employment and Distribution Effects of Changes in the Minimum Wage." Skill Mismatch and Earnings: A Panel analysis of the U.S. Labor Market This chapter examines the effect on earnings induced by a mismatch between workers' skills and the skills actually required on the job. It uses the Current Population Survey (CPS) for the period 1983-2002. The special re-interview methodology of the CPS is used to create a large panel, so that individual heterogeneity can be controlled for. Skill requirements are estimated by the median education level for each 3-digit occupation in the 1980 census occupational classification. The analysis, including the determination of skill requirements, is conducted for males and females separately. Cross-sectional analysis confirms the findings in the recent literature. Returns to required schooling are higher than the returns to attained education in standard earnings regressions. Also, for workers with similar educational attainment, over-education reduces earnings and under-education increases them. Contrary to what other studies have found, we conclude that these results are confirmed after controlling for individual fixed effects. The chapter also investigates which groups are more exposed to mismatch. I use standard probit analysis with over-education and under-education as the respective dependent variables. Women, service sector, and non-unionized workers appear to have higher probabilities of mismatch. Earnings Inequality and Skill Mismatch This chapter shows that skill mismatch is a significant source of inequality in real earnings in the U.S. and that a substantial fraction of the increase in wage dispersion during the period 1973-2002 was due to the increase in mismatch rates and mismatch premia. Standard human capital earnings regressions that do not decompose the education variable into required, surplus, and deficit years provide biased estimates of the relative importance of education in explaining earnings inequality. In 2000-2002 surplus and deficit qualifications taken together accounted for 4:3 and 4:6 percent of the variance in earnings, or around 15 percent of the total explained variance. The dramatic increase in over-education rates and premia accounts for around 11 and 32 percent of the increase in the coeffcient of variation of log earnings during the 30 years under analysis for males and females respectively. Residual inequality is slightly diminished when the estimating equation allows the prices of surplus, required and deficit qualifications to differ but the well-studied increasing trend of within-group inequality remains otherwise unchanged. Changes in the composition of the labor force are found to be important predictors of increasing residual inequality even when skill mismatch is taken into account. The Distributive Effects of the Minimum Wage: an Effciency Wage Model with Skill Mismatch (co-authored with Peter Skott) This chapter analyzes the effect of changes in the real value of the minimum wage on the wage distribution. Changes in the minimum wage and other labor market institutions affect workers in all groups and empirically appear to be good complement to standard supply and demand arguments in explaining overall inequality. We use an effciency wage model but allow for mismatch between jobs and workers. This framework yields predictions not only on the skill premium but also on the extent of inequality within groups. To keep matters as simple as possible, we assume that high-skill workers can get two types of jobs (good and bad), whereas low-skill workers have only one type of employment opportunity (bad). As long as some matches of high-skill workers and bad jobs are sustained in equilibrium, changes in the exogenous variables will affect not only wages and employment rates but also the degree of mismatch. Thus, this paper shows that `over-education' can be generated endogenously in effciency wage models and that a fall in the real value of the minimum wage can (i) reduce total employment, (ii) lead to a simultaneous decline in both the relative employment and the relative wage of low-skill workers, and (iii) produce a rise in within-group as well as between-group inequality. Evidence from the US suggests that these theoretical results are empirically relevant.

This dissertation contributes to the current understanding of human capital and its importance for earnings inequality and taxation. Human capital is typically defined as the stock of knowledge or skills acquired through education and working experience. The first chapter analyzes student borrowing behaviors in postsecondary education in the United States, the second chapter studies cross-country differences in earnings inequality within an endogenous growth model of human capital accumulation, and the third chapter examines the impact of endogenous human capital formations over a life-cycle on optimal fiscal policy. In Chapter 1, I document that new federal student loans for higher education in the United States have risen more than 5 times over the past 20 years. What caused this dramatic increase? I develop a heterogeneous life-cycle model of human capital accumulation to analyze individual college and borrowing decisions. Using this framework, I assess the quantitative contributions of changes in the college wage premium, college costs, maximum borrowing limits, and loan interest rates to explain the significant rise of federal student loans. I find that the calibrated model accounts for 57 percent of the actual increase in loans from 1990 to 2011. Increases in the college wage premium and college costs are important factors in generating the sharp rise in loans and, particularly, the increase in the fraction of borrowers and borrowing amounts. The expansion of credit availability and decreased loan interest rates have a relatively minimal impact on individual college and borrowing decisions. Chapter 2 explores why earnings inequality has been substantially higher in the US than in European countries over the last 30 years. I focus on the role of differences in tax progressivity, intergenerational earnings persistence, returns to education investments, and public education spending. I develop a growth model of human capital accumulation, and show analytically how those factors affect the dynamics of earnings inequality. The calibrated model accounts for 31 percent of the observed differences in earnings inequality between European countries and the US for 2003-07. Differences in returns to education investments and intergenerational earnings persistence are quantitatively important, suggesting the potential role of educational policy in ameliorating rising earnings inequality. Chapter 3, written jointly with Martin Gervais, analyzes the role of endogenous human capital accumulation in shaping optimal fiscal policy within a life-cycle growth model. We show that when investment in human capital is not verifiable---making the tax code incomplete---a non-zero capital income tax becomes optimal in order to alleviate the distortionary effects of the labor income tax on investment in human capital. This is true even if the government has access to a full set of age-dependent labor and capital income taxes. The main result is in sharp contrast to the finding in Jones et al. (1997) that all interest taxes are zero in infinitely-lived agent models with endogenous human capital formation.

Earnings inequality had been rising in the United States since the late 1970s. However, at the level of individual states earnings inequality has been rising, stable, and even falling in some states at different points in time. States vary in both the degree and character of change in earnings inequality, the extent to which they have experienced various inequality-increasing developments, and their institutional capacity to mediate these developments. I argue in this dissertation that this variation offers a rich opportunity for comparative analysis and an excellent lens for exploring the dynamics of the recent rise in earnings inequality.In this dissertation I utilize multiple methods and a state-level analysis to explore a number of research questions. What are the major factors driving rising state earnings inequality between 1980 and 2007? To what extent have states taken distinct causal paths to higher levels of inequality? How have states differed in terms of the types of wage growth that have result in rising, stable, or falling inequality? Throughout, special attention is paid to the manner in which state institutional arrangements, such as union strength and minimum wage rates, may mediate various inequality-increasing developments. Additionally, there is a focus on the contribution of industry flows, specifically losses of manufacturing employment and increasing employment in financial, technology and health-related occupations, to regional patterns of change in inequality.Overall, the intensity, timing, and number of factors that have converged upon any particular state vary substantially between regions and over time. A broad finding of this dissertation is that the net impact of many inequality-increasing factors is contingent upon a state's economic condition and institutional character. In particular, state institutional arrangements have powerfully mediated the impact of various inequality-increasing developments. Also, these analyses suggest that industry shifts have substantially impacted state earnings distributions and are critical to understanding regional patterns of change in earnings inequality. In closing, I suggest that much research on rising inequality at the national-level does not fully capture the substantial diversity of state experiences with rising inequality or the complexity of the interactions between the various factors producing those distinct experiences.

This dissertation consists of three essays. The first essay studies how health risk affects individuals' economic decisions due to changes in productivity, required medical expenditures, available time and survival probabilities implied by changes in health status. It assesses the role of these four channels in determining labour supply, asset accumulation and welfare using a life-cycle model calibrated to the U.S. economy. I find that all channels and the interactions between them have large implications for the macroeconomic variables studied. Health has larger effects for the non-college than college educated, explaining a significant fraction of the difference in labour supply, degree of reliance on government transfers and asset accumulation across education groups. Improving non-college health outcomes to approach those of college graduates results in large welfare gains, higher labour supply, and significantly lower reliance on government welfare programs. The second essay studies the evolution of wage inequality in the United States between 1980 and 2002 in a framework that accounts for changes in the employment of physical and cognitive skills and their returns. I find that within education-gender groups, average employed cognitive skills have remained constant, while average physical skills have declined. The returns to high levels of cognitive skills have increased dramatically, while returns to low levels of cognitive skills and physical skills have remained approximately constant. Skills account for approximately half of the increase in the college wage premium, and for a small but growing fraction of residual wage inequality. The final essay studies the sorting decisions of students with different levels of analytical and verbal skills into college fields of study. I build a model where each field tests and perfectly reveals to potential future employers only the students' skill that is intensively required in that field. Students' expected wages after graduation are a function of their revealed skill levels and firms' expectations of the unrevealed skills given the chosen field. I show how the size of each field and the average talent it attracts depend on the average skill levels, on skill dispersion and on the degree of correlation between skills in the student population.

This study seeks to analyze the changes in the effects of determinants of earnings inequality and their labor market implications in urban China from 1988 to 2002. It analyzes urban individual data from the 1988, 1995, and 2002 surveys of the China Household Income Project by studying its inequality measures and summary statistics, and by conducting an ordinary least squares regression, quantile regression, and regression-based decomposition analysis. It finds that the labor market has indeed been rewarding human capital variables, in which age and work experience, which are related to seniority, have been decreasing in their contribution to earnings inequality, whereas education and skill-based occupation have been increasing their contributions to earnings inequality. In addition, the labor market has become more discriminatory in terms of gender, which has increased its contribution to earnings inequality, and less discriminatory in terms of minority status and Communist party membership, which have decreased their contributions to earnings inequality. The labor market has also become more segmented in terms of work unit sector, which has increased its contribution to earnings inequality, but has also become less segmented in terms of ownership, which has actually started to contribute to earnings equality. These observations show that urban China’s labor market has been becoming more market-oriented and has been progressing overall, except for its increasing gender discrimination and segmentation by sector.

This dissertation consists of three essays. The first essay studies how health risk affects individuals' economic decisions due to changes in productivity, required medical expenditures, available time and survival probabilities implied by changes in health status. It assesses the role of these four channels in determining labour supply, asset accumulation and welfare using a life-cycle model calibrated to the U.S. economy. I find that all channels and the interactions between them have large implications for the macroeconomic variables studied. Health has larger effects for the non-college than college educated, explaining a significant fraction of the difference in labour supply, degree of reliance on government transfers and asset accumulation across education groups. Improving non-college health outcomes to approach those of college graduates results in large welfare gains, higher labour supply, and significantly lower reliance on government welfare programs. The second essay studies the evolution of wage inequality in the United States between 1980 and 2002 in a framework that accounts for changes in the employment of physical and cognitive skills and their returns. I find that within education-gender groups, average employed cognitive skills have remained constant, while average physical skills have declined. The returns to high levels of cognitive skills have increased dramatically, while returns to low levels of cognitive skills and physical skills have remained approximately constant. Skills account for approximately half of the increase in the college wage premium, and for a small but growing fraction of residual wage inequality. The final essay studies the sorting decisions of students with different levels of analytical and verbal skills into college fields of study. I build a model where each field tests and perfectly reveals to potential future employers only the students' skill that is intensively required in that field. Students' expected wages after graduation are a function of their revealed skill levels and firms' expectations of the unrevealed skills given the chosen field. I show how the size of each field and the average talent it attracts depend on the average skill levels, on skill dispersion and on the degree of correlation between skills in the student population.

This degree work is focus on income inequality of men and women in the Czech Republic. The work is separated into theoretical and practical part. In the theoretical part the importance is emphasized to equality, development of men's and women's equality and to regulations that include equality of men and women. More specified is also gender question and terms that are related. The practical part presents system of evaluation in the company and then it deals with progress of salaries and bonuses during years in the individual work position. Dates were got from specific company and then they were processed. Results are later comparing to dates of Czech statistical office.

Les inégalités de revenus et la polarisation de l'emploi ont augmenté dans plusieurs pays au cours des dernières décennies, suscitant des préoccupations d'équité ainsi que des interrogations concernant les politiques de redistribution. Cette thèse répond à deux questions primordiales. La première concerne le rôle des heures travaillées et de leur dispersion pour expliquer les inégalités de revenu; la seconde porte sur le rôle de l'offre de travail des femmes dans l'explication de la polarisation de l'emploi. Le premier chapitre utilise des données pour les États-Unis, le Royaume-Uni, l'Allemagne et la France et examine comment les inégalités de revenu sont affectées par la dispersion des heures de travail. Le principal enseignement de cette approche est que la dispersion des heures de travail peut expliquer plus d'un tiers des inégalités de revenu dans certains pays et que la corrélation entre le salaire horaire et les heures travaillées s'est accrue au fil du temps. Le second chapitre s'appuie sur les résultats du précédent et explore les mécanismes qui expliquent la tendance à la hausse de la corrélation entre salaires et heures travaillées. Nous constatons qu'une plus grande volatilité de la production agrégée et une réglementation plus stricte du marché du travail ont tendance à réduire l'élasticité, alors qu'une augmentation du commerce dans un secteur les augmente. Enfin, le troisième chapitre met l'accent sur le rôle des femmes hautement qualifiées dans l'évolution du marché des substituts de la production domestique et montre que, lorsque les femmes hautement qualifiées travaillent plus d'heures, les femmes moins qualifiées sont plus susceptibles d'être employées. / Earnings inequality and job polarization have increased in a number of countries during the last decades, raising concerns of fairness and fostering debates on the implications for redistributive policies. This thesis asks two main questions. The first concerns the relevance of hours worked and their dispersion for earnings inequality, while the second question investigates the role of female labour supply in explaining the increase in job polarization. The first chapter uses data for the USA, the UK, Germany, and France and examines how earnings inequality is affected by the dispersion of working hours. The main result of this exercise is that hours dispersion can account for over a third of earnings inequality in some countries and that the relevance of the correlation between wages and working hours has been growing over time. The second chapter builds on the results of the previous one and explores the forces behind the upward trend of the correlation between wages and working hours. We find that greater aggregate output volatility and stricter labour market regulation tend to reduce the elasticity, while a greater trade share in an industry raises it. Finally, the third chapter investigates the relevance of female employment for job polarization in Germany. The analysis focuses on the role of high-skilled females in the evolution of a market for home production substitutes and finds that when top-employed females work more hours, low-skilled women are more likely to be employed.

Educational assortative mating and earnings inequality has both increased in both Europe and the United States in the last decades. As a result, educational assortative mating, or educational homogamy, has been suggested as a potential explanation for the increase in earnings inequality. According to this hypothesis increased sorting on education will lead to polarization between lower and higher-educated couples where the advantages of the latter will compound on one another and lead to increased economic inequality.   The majority of the studies to date report a non-relationship between educational assortative mating and earnings inequality, one of the exceptions being a study of Denmark. This exception has led sociologists to theorize that the impact of educational assortative mating could be especially strong in the Nordic countries. In this study I test this hypothesis by employing a novel decomposition method, the Theil-index, to answer if increases in educational assortative mating are associated with increases in earnings inequality in Sweden between 2000 and 2010, using data from the Standard of Living Survey (LNU).   The result is a non-relationship between homogamy and earnings inequality and an overall decrease in earnings inequality in the sample. The result is another null result for the hypothesis that educational homogamy leads to inequality, and points to a larger discrepancy between singles and couples than between couples. If corroborated, this decrease in earnings inequality would mean a divergence, in earnings inequality, between partnered individuals and the general population. Future studies should focus on the extent of this divergence.