Hours Worked and the U.S. Distribution of Real Annual Earnings 1976-2019

We examine the impact of annual hours worked on annual earnings by decomposing \nchanges in the real annual earnings distribution into composition, structural and hours \neffects. We do so via a nonseparable simultaneous model of hours, wages and earnings. \nUsing the Current Population Survey for the survey years 1976–2019, we find that \nchanges in the female distribution of annual hours of work are important in explaining \nmovements in inequality in female annual earnings. This captures the substantial \nchanges in their employment behavior over this period. Movements in the male hours \ndistribution only affect the lower part of their earnings distribution and reflect the \nsensitivity of these workers’ annual hours of work to cyclical factors.