AI Summary. Analysis of Current Population Survey data finds second-generation Nigerian Americans have higher educational attainment than other second-generation Black Americans, third- and higher-generation African Americans, and third- and higher-generation whites. Controlling for age, education, and disability, their wages reach parity with third-generation whites, with men averaging $40.05 an hour and women $31.24.

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Second-generation Nigerian Americans have achieved significant socioeconomic milestones, with wages reaching parity with third-generation whites. Men earn $40.05/hour, while women earn $31.24/hour. @ArthurSakamoto

How do second-generation Nigerian Americans compare in education and wages?

Core argument: Second-generation Nigerian American men averaged $40.05 an hour in Current Population Survey data from 2009 to 2019, the highest among their peers, while second-generation Nigerian American women averaged $31.24.

Analysis of CPS data from 2009 to 2019 reveals that second-generation Nigerian Americans have achieved significant socioeconomic milestones, with educational attainment surpassing that of other second-generation black Americans, third- and higher generation African Americans, and even third- and higher generation whites. When controlling for age, education, and disability, their wages have reached parity with third-generation whites. Notably, second-generation Nigerian American men have an average hourly wage of $40.05, the highest among their peers, while women earn $31.24 on average. These findings highlight the remarkable economic progress of this demographic, underscoring the need for further research into the socioeconomic variations within the African American/black category by gender, ethnicity, and generational status.

Takeaways by Macro Roundup® AI

  1. Second-generation Nigerian American men averaged $40.05 an hour in Current Population Survey data from 2009 to 2019, the highest among their peers, while second-generation Nigerian American women averaged $31.24.
  2. Second-generation Nigerian Americans' educational attainment exceeded that of other second-generation black Americans, third- and higher generation African Americans, and third- and higher generation whites, according to the Current Population Survey analysis.
  3. Controlling for age, education, and disability, second-generation Nigerian Americans' wages reached parity with third- and higher generation whites, and the authors call for further research into socioeconomic variation within the African American/black category by gender, ethnicity, and generational status.

Arthur Sakamoto, Ernesto F. L. Amaral, Sharron Xuanren Wang, and Courtney Nelson, "The Socioeconomic Attainments of Second-Generation Nigerian and Other Black Americans: Evidence from the Current Population Survey, 2009 to 2019,"Socius: Sociological Research for a Dynamic World, 2021, https://journals.sagepub.com/doi/pdf/10.1177/23780231211001971

Racism clearly a major headwind to the success of the Nigerian-American community, using CPS data researcher look at wage data by generation“…The results indicate thatthe educational attainment of second-generation Nigerian Americans exceeds other second-generation black Americans, third- and higher generation African Americans, third- and higher generation whites, second-generation whites, and second-generation Asian Americans. Controlling for age, education, and disability, the wages of second-generation Nigerian Americans have reached parity with those of third- and higher generation whites…”

Wage data shows Nigerian American men are ~ on par with Asian and White Men, “…Table 7 shows statistics regarding the hourly wage in constant 2019 dollars. These are bivariate statistics (i.e., not controlling for other characteristics), so they should not be used to make conclusions about overall patterns of wage determination in the labor market. Nonetheless, not surprisingly, the average wage is higher at higher levels of education for each demographic group. Married persons have a higher average hourly wage than unmarried persons across all demographic groups. As is evident in Table 7, three groups have an average hourly wage greater than $35, including second-generation Asian men, second-generation white men, and second-generation Nigerian American men.The mean wage of the latter group is the highest in Table 7 (i.e., $40.05). The female group with the highest average wage is second-generation Asian women (i.e., $31.96). The mean wage for second-generation Nigerian American women closely follows (i.e., $31.24)…”
Core takeaway, “…Second-generation black Americans have been inadequately studied in prior quantitative research. The authors seek to ameliorate this research gap by using the Current Population Survey to investigate education and wages among second-generation black Americans with a focus on Nigerian Americans. The latter group has been identified in some qualitative studies as having particularly notable socioeconomic attainments. The results indicate that the educational attainment of second-generation Nigerian Americans exceeds other second-generation black Americans, third- and higher generation African Americans, third- and higher generation whites, second-generation whites, and second-generation Asian Americans. Controlling for age, education, and disability, the wages of second-generation Nigerian Americans have reached parity with those of third- and higher generation whites. The educational attainment of other second-generation black Americans exceeds that of third- and higher generation African Americans but has reached parity with that of third- and higher generation whites only among women. These results indicate significant socioeconomic variation within the African American/black category by gender, ethnicity, and generational status that merits further research….”

The Socioeconomic Attainments of Second-Generation Nigerian and Other Black Americans: Evidence from the Current Population Survey, 2009 to 2019: Extended Excerpt Image 1


Ed CommentOf course, we know the reason why—selection bias and genetics. Although I’m doubtful the denies ill ever admit it.

AI Summary. Asian immigrants in Australia are less educationally hyper-selected than those in the United States, where family-based migration yields more skilled immigrants and Australia's skilled migration covers occupations ranging from medical practitioners to trades. Asian immigrants in the US achieve higher labor market outcomes despite greater income inequality.

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US family-based system outperforms Australian skills-based model for Asian migrants. US achieves higher immigrant outcomes despite less selective criteria.

Does family-based migration attract more skilled immigrants than skills-based selection?

Core argument: Asian immigrants in Australia are less educationally hyper-selected than those in the United States, even though Australia runs a skills-based migration policy and the US relies largely on family-based migration.

Despite Australia's skills-based migration policy, Asian immigrants are less hyper-selected there compared to the US, where family-based migration yields more skilled immigrants. In Australia, skilled migration includes a broad range of occupations, from highly skilled medical practitioners to trades requiring technical apprenticeships, which dilutes educational hyper-selectivity. Conversely, Asian immigrants in the US achieve higher labor market outcomes despite facing greater income inequality. This suggests that the US system, while not explicitly skills-focused, effectively attracts and utilizes skilled immigrants, leading to better economic integration and success compared to Australia.

Takeaways by Macro Roundup® AI

  1. Asian immigrants in Australia are less educationally hyper-selected than those in the United States, even though Australia runs a skills-based migration policy and the US relies largely on family-based migration.
  2. Australia's skilled migration stream spans occupations from medical practitioners to trades requiring technical apprenticeships, which dilutes the educational hyper-selectivity of its Asian immigrant population.
  3. Asian immigrants in the United States achieve higher labor market outcomes than their counterparts in Australia despite facing greater income inequality.

“…Despite Australia’s official skills-based migration policy,Asian immigrants are less hyper-selected in Australia compared to the United States.On its face, this finding is surprising because it upends conventional wisdom and “grand narratives” about the role of immigration policy in selecting immigrants. However, among immigrants with post-high school educational qualifications, immigrants from Asia are more likely to arrive via humanitarian or family-based mechanisms, compared to immigrants from English speaking countries (Kler 2006). In addition, Australia’s skilled-based migration programs over the years have included a wide range of occupations, from highly skilled cardiologists and other medical practitioners that require lengthy postgraduate training, to cabinetmaker, chef and other skilled workers whose educational qualifications could be fulfilled through a few years of technical apprenticeship. As a result, Australia’s skilled-based immigration policy does not necessarily result in higher levels of hyper-selectivity in education than in the United States. Second, we find mixed evidence for our second hypothesis. While Asian immigrants have fared well in both societies, their level of achievement is significantly higher in the United States with regards to labor market outcomes. Asian immigrants in our study did not achieve better socioeconomic outcomes compared to their U.S. counterparts. Even with considerably high educational attainment, Asian immigrants in Australia are less likely to convert their human capital to advantageous labor market outcomes and economic success. This finding provides useful data for the debate on the effects of multiculturalism policy. Because Australia’s “White Australia” policy was abolished only in the 1970s, its racist legacy may still affect the social and economic outcomes of non-European immigrant groups. Third, we find some evidence for our third hypothesis: the level of income inequality in the host society plays some role in affecting migrants’ socioeconomic outcomes. While Asian immigrants are more hyper-selected in the United States, they report a disadvantage in labor market outcomes, including earnings in comparison to whites, despite their significant educational advantage. This reflects the higher level of inequality in the United States, where the white advantage cuts across multiple domains. In contrast, Asian immigrants are less hyper-selected in Australia, but they report less of a disadvantage in the labor market and earnings than Australiaborn non-Indigenous Europeans, because the gaps among ethnoracial groups are also more compressed there….”

The Integration Paradox: Asian Immigrants in Australia and the United States: Extended Excerpt Image 1


Van Tran, Fei Guo and Tiffany Huang, "The Integration Paradox: Asian Immigrants in Australia and the United States," American Academy Of Political And Social Science, August 4, 2020, https://journals.sagepub.com/doi/abs/10.1177/0002716220926974

Suspect this is driven by the size of American market and innovation clusters.

Counterintuitive but maybe not surprising, new paper finds that to this point the US family based migration system yields more skilled immigrants than Australia's skill based system (would be interesting to see if this holds true for Canada as well) and once here Asian immigrants get better labor market outcomes than they do in AU.

Ed Comment: Interesting. Ok to post. I agree that high paying jobs for smart people are more abundant per capita in America than they are in Australia where no one, for example, is probably conducting large scale research like they are here. I don’t know what “report” in they report a disadvantage in labor market outcomes… means. Asians earn more in the US and probably more relative to the median than elsewhere, so what does “report” disadvantages mean if the facts don’t back it up?

AI Summary. Cognitive test scores measured in adolescence are strongly associated with Black-white gaps in economic mobility: among those at the median score, the gap in moving out of the bottom income fifth is 5.2 percentage points, versus 27 percentage points unconditionally. The authors argue narrowing racial disparities in test scores could substantially reduce gaps in intergenerational mobility.

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Racial gaps in mobility are relatively small for those with median AFQT scores. The black-white gap in moving out of the bottom quintile is 5.2pp, compared to 27pp unconditional. @BhashkarMazumder, Economic Perspectives.

Do adolescent test scores explain racial gaps in economic mobility?

Core argument: Conditional on a median AFQT score, the black-white gap in moving out of the bottom income quintile is 5.2 percentage points, compared with an unconditional gap of 27 percentage points.

Cognitive skills during adolescence, as measured by the AFQT [Armed Forces Qualification Test], are strongly linked to racial gaps in economic mobility. Conditional on having the median AFQT score, the racial gaps in both upward and downward mobility are relatively small. For instance, the black-white gap in moving out of the bottom quintile is only 5.2 percentage points for those with median AFQT scores, compared to an unconditional gap of 27 percentage points. This suggests that cognitive skills measured at adolescence can account for much of the black-white difference in upward mobility. Similarly, for downward mobility, the racial gap is below 10 percentage points across a broad range of the AFQT distribution and is not statistically different from 0. These findings imply that reducing racial disparities in test scores could significantly narrow the racial gap in intergenerational mobility, reflecting accumulated differences in family background rather than innate endowments.

Takeaways by Macro Roundup® AI

  1. Conditional on a median AFQT score, the black-white gap in moving out of the bottom income quintile is 5.2 percentage points, compared with an unconditional gap of 27 percentage points.
  2. For downward mobility, the black-white gap is below 10 percentage points across a broad range of the AFQT distribution and is not statistically different from zero.
  3. The authors suggest that cognitive skills measured in adolescence can account for much of the black-white difference in upward mobility, reflecting accumulated differences in family background rather than innate endowments.

“….It appears that cognitive skills during adolescence, as measured by scores on the Armed Forces Qualification Test (AFQT), are strongly associated with these gaps. For example, conditional on having the median AFQT score, the racial gaps in both upward and downward mobility are relatively small. Consistent with previous studies linking AFQT scores to racial differences in adult outcomes (for example, Neal and Johnson, 1996; Cameron and Heckman, 2001), I do not interpret these scores as measuring innate endowments but rather as reflecting the accumulated differences in family background and other influences that are manifested in test scores.6 If these results are given a causal interpretation, they suggest that actions that reduce the racial gap in test scores could also reduce the racial gap in intergenerational mobility…. The effects of including one’s AFQT score on rates of upward mobility are shown in panel C of figure 8. Here, the results provide a relatively clean and compelling story. For both blacks and whites, upward mobility rises with AFQT scores in a fairly similar fashion. There are especially sharp gains in upward mobility associated with increases in test scores at the low end of the AFQT distribution. Upward mobility continues to rise at a somewhat slower but still strong rate in the middle and in the upper half of the AFQT distribution. Remarkably, the lines for blacks and whites are relatively close throughout the AFQT distribution. For example, the black-white gap in moving out of the bottom quintile is only 5.2 percentage points for those with median AFQT scores, compared with the unconditional gap of 27 percentage points. This suggests that cognitive skills measured at adolescence can “account” for much of the black-white difference in upward mobility. This result echoes previous findings by Neal and Johnson (1996) and Cameron and Heckman (2001), who have also found that AFQT scores can account for much of the racial gap in adult earnings and college enrollment rates. As with these aforementioned studies, I interpret this finding as reflecting the cumulative effect of a broad range of family background influences rather than reflecting only innate differences.28 The effects of AFQT scores on downward mobility (panel D of figure 8) are also quite striking. The lines for whites and blacks converge quite a bit and for a broad swath of the AFQT distribution, the racial gap is below 10 percentage points and is not statistically different from 0. Therefore, as was the case with upward mobility, test scores during adolescence are strongly associated with rates of downward mobility….”

Black White Differences In Intergenerational Economic Mobility In The United States: Extended Excerpt Image 1


Bhashkar Mazumder, "Black White Differences In Intergenerational Economic Mobility In The United States,"Economic Perspectives, 2014, https://papers.ssrn.com/sol3/papers.cfm

Ed Comment: He admits:“….conditional on having the median AFQT score, the racial gaps in both upward and downward mobility are relatively small…”But argues (with no evidence):“….Consistent with previous studies linking AFQT scores to racial differences in adult outcomes (for example, Neal and Johnson, 1996; Cameron and Heckman, 2001), I do not interpret these scores as measuring innate endowments but rather as reflecting the accumulated differences in family background and other influences that are manifested in test scores. (6 A growing literature suggests that black-white differences in test scores can be strongly affected by environmental influences. For example, see Chay, Guryan, and Mazumder (2009) and Aaronson and Mazumder (2011).)….”See figure 8 panels c and d (below) once you control for test scores there is almost no difference despite large difference in other factors such as family structure.”

AI Summary. Accounting for statistical uncertainty, rankings of U.S. neighborhoods by intergenerational income mobility are precise only among the 50 most populous commuting zones or counties, and become largely uninformative when all commuting zones, finer geographic units, or movers are considered. Rankings of academic achievement across countries remain stable under the same scrutiny.

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Chetty’s mobility data, when scrutinized for uncertainty, reveals significant limitations in its robustness. While conclusions about academic achievement across countries remain stable, findings on intergenerational mobility in the U.S. are less reliable.

Are neighborhood mobility rankings reliable once statistical uncertainty is considered?

Core argument: Rankings of U.S. intergenerational mobility are robust only for the 50 most populous commuting zones or counties, where confidence sets are narrow, once statistical uncertainty is accounted for.

Chetty's mobility data, when scrutinized for uncertainty, reveals significant limitations in its robustness. While conclusions about academic achievement across countries remain stable, findings on intergenerational mobility in the U.S. are less reliable. The analysis shows that robust results are only achieved when focusing on the 50 most populous commuting zones or counties, where confidence sets are narrow. However, when considering all commuting zones, the geographic patterns of income mobility become less clear, with the West Coast and Northeast not necessarily exhibiting high mobility. Furthermore, rankings become largely uninformative when neighborhoods are defined with greater granularity or when movers across areas are considered. This suggests that celebrated findings about U.S. intergenerational mobility may not hold under rigorous uncertainty analysis, highlighting the need for cautious interpretation of such data.

Takeaways by Macro Roundup® AI

  1. Rankings of U.S. intergenerational mobility are robust only for the 50 most populous commuting zones or counties, where confidence sets are narrow, once statistical uncertainty is accounted for.
  2. Across all commuting zones, geographic patterns of income mobility become less clear, with the West Coast and Northeast not necessarily ranking as high-mobility areas.
  3. Mobility rankings become largely uninformative when neighborhoods are defined more granularly or when movers across areas are considered, while cross-country academic achievement rankings remain stable.

Critique of Chetty's mobility data

“…It is often desired to rank different populations according to the value of some feature of each population. For example, it may be desired to rank neighborhoods according to some measure of intergenerational mobility or countries according to some measure of academic achievement. These rankings are invariably computed using estimates rather than the true values of these features. As a result, there may be considerable uncertainty concerning the rank of each population…we consider the problem of accounting for such uncertainty by constructing confidence sets for the rank of each population. We consider both the problem of constructing marginal confidence sets for the rank of a particular population as well as simultaneous confidence sets for the ranks of all populations. We show how to construct such confidence sets under weak assumptions. An important feature of all of our constructions is that they remain computationally feasible even when the number of populations is very large. We apply our theoretical results to re-examine the rankings of both neighborhoods in the United States in terms of intergenerational mobility and developed countries in terms of academic achievement. The conclusions about which countries do best and worst at reading, math, and science are fairly robust to accounting for uncertainty. By comparison, several celebrated findings about intergenerational mobility in the United states are not robust to taking uncertainty into account....In our analysis of data from the 2018 PISA test, we find that the conclusions about which developed countries do best and worst at reading, math, and science are fairly robust to accounting for uncertainty. Both the marginal and simultaneous confidence sets are relatively narrow, especially for the countries at the top and the bottom of the PISA league tables. Indeed, only a small set of countries cannot be ruled out as being among the top or bottom three in terms of scholastic performance. In our analysis of data from Chetty et al. (2014, 2018), we find that several celebrated findings about intergenerational mobility in the United States are not robust to taking uncertainty into account. The most robust findings are obtained if we restrict attention to the 50 most populous commuting zones or counties. In that case, both the marginal and joint confidence sets are relatively narrow, and few places cannot be ruled out as being among the top or bottom five. By comparison, conclusions about the geographic patterns of income mobility become less robust to uncertainty when we consider all commuting zones. While upward mobility appears to be low in the Southeast and high in the Great Plains, it is not clear that the West Coast and the Northeast have particularly high income mobility. Nor is it possible to make a strong case for a lot of within-region variation in income mobility. Furthermore, rankings of places by upward mobility become largely uninformative if one defines neighborhoods with even more granularity by considering all counties or if one uses movers across areas to address concerns about selection.
Magne Mogstad, Azeem M. Shaikh, Joseph P. Romano and Daniel Wilhelm, "Inference for Ranks with Applications to Mobility across Neighborhoods and Academic Achievement across Countries, "University Of Chicago, March 13, 2020, https://statistics.stanford.edu/sites/g/files/sbiybj6031/f/2020-03.pdf

AI Summary. Across countries, industries employing more highly educated workers recorded faster productivity growth than low-education industries, rising by more than 0.34 log points versus 0.20 log points over roughly three decades. Wage growth followed the same direction but by a smaller margin, a pattern consistent with skill-biased technological change operating globally.

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Productivity growth has not only shifted but stretched, with high-skill workers experiencing faster productivity increases than less-skilled counterparts.

Do industries with more educated workers see faster productivity and wage growth?

Core argument: Productivity in high-education industries grew by over 0.34 log points between 1989 and 2017, versus 0.20 log points in low-education industries, a divergence evident across countries.

Recent data reveals that productivity growth has not only shifted but stretched, with high-skill workers experiencing faster productivity increases than their less-skilled counterparts. This trend is evident across countries, suggesting global factors like skill-biased technological change are at play. Between 1989 and 2017, productivity in high-education industries grew by over 0.34 log points, compared to just 0.20 log points in low-education industries. Wage growth followed a similar pattern but was less pronounced, with high-education industries seeing a 0.26 log point increase versus 0.24 in low-education sectors. The disparity in productivity growth is more than sufficient to explain the wage gap expansion, highlighting the growing skill disparity and its contribution to rising inequality. This pattern is consistent with the increased college-high school premium in productivity outpacing the wage premium over the past three decades.

Takeaways by Macro Roundup® AI

  1. Productivity in high-education industries grew by over 0.34 log points between 1989 and 2017, versus 0.20 log points in low-education industries, a divergence evident across countries.
  2. Wage growth followed the same pattern less sharply between 1989 and 2017, rising 0.26 log points in high-education industries against 0.24 in low-education sectors.
  3. The gap in productivity growth between high- and low-education industries is more than sufficient to explain the widening wage gap, consistent with the college-high school productivity premium outpacing the wage premium over three decades.

New Ed Lazear paper using OECD data (including hours worked) implicitly supports that idea the labor markets have segmented and high skill (he uses education as a proxy for skill) workers are increasingly servicing other high skilled workers, "..heart of this research, is to show thataggregate productivity masks a key part of the story. The productivity distribution has not merely shifted. It has stretched out. Productivity among more educated workers has grown more rapidly than productivity of less educated workers.This is consistent with growing wage dispersion, where the wages of highly educated, high wage workers have pulled away from wages of less educated, low wage workers..."

Productivity and Wages: Common Factors and Idiosyncrasies Across Countries and Industries: Extended Excerpt Image 1


Edward Lazear, "Productivity and Wages: Common Factors and Idiosyncrasies Across Countries and Industries," National Bureau of Economic Research, November 2019, https://www.nber.org/papers/w26428

“…. heart of this research, is to show that aggregate productivity masks a key part of the story. The productivity distribution has not merely shifted. It has stretched out. Productivity among more educated workers has grown more rapidly than productivity of less educated workers. This is consistent with growing wage dispersion, where the wages of highly educated, high wage workers have pulled away from wages of less educated, low wage workers..."

His core finding,

“…. The commonality of the pattern across countries suggests that global rather than institutional factors are at work. The most obvious candidate is the often discussed biased nature of technological change that has benefitted disproportionately highly skilled workers.....It is difficult to observe productivity at the individual level, but industry data on productivity can be linked with demographic and data on education. This permits an examination of changes in productivity industries that are dominated by highly educated workers versus those dominated by less educated ones. By doing this, it is possible to determine whether the productivity distribution has spread out over time consistent with the changing wage distribution..... Cross-industry data provide evidence that rather than merely displacing upward, the entire distribution has changed shape. The upper tail of the distribution has moved away from the lower tail. The rise in productivity of the high skilled, typically highly educated workers, relative to the low skilled typically less educated workers, has generated an increase in skill disparity, which is consistent with observed increases in inequality over time....There are a number of potential causes of the spreading out of the productivity distribution.... One is the frequently referenced skill-biased technological change that postulates that changes in technology have affected the productivity of highly educated workers more than less educated ones..... Another is that trade has increased in a way that enhances the productivity and wages of the most skilled workers...A third possibility is that schools in the United States may have become more proficient over time in educating the better students relative to the weaker ones.... The main conclusion is that changes in productivity at different educational levels are more than sufficient to account for changes in the wage distribution. The college-high school premium in wages has increased by much less than the college-high school premium in productivity has increased over the past almost-three decades. These changes are consistent with a number of possible causes, which include skill-biased technological change, trade patterns that have altered prices in a non-neutral fashion, and changes in human capital production technologies that favor tertiary over primary and secondary education. The analysis cannot address the specific cause, nor does the fact that non-neutral productivity growth can account for growing skill differences lessen the problem...”

He hypothesis these returns could be caused by several factors but doesn’t attempt to attribute causality

“…The most obvious illustration of the correlation between wages and productivity at the aggregate level comes from cross country comparisons. OECD data on wages and productivity across countries make immediately apparent that the two are linked. Figure 2, which plots the 2017 average wage against labor productivity (the last year for which data are available),defined as output in US dollars per hour worked, reveals the close co-movement of wages with productivity. Countries like Switzerland, Norway, Denmark and Luxembourg all have both high productivity and high wages. At the other end, countries like Mexico, Chile, Latvia, Poland and Estonia have low productivity and low wages.The correlation coefficient between log wage and log productivity in 2017 is.84…The most important finding is summarized in figure 9. Forty 3-digit industries for which complete productivity, wage and education data are available over the period 1989-2017 are split into two groups. The top and bottom groups are comprised of industries that rank in the highest and lowest 50% based on average education level in the industry in 1989. The left two bars compare productivity growth in logs for high and low education industries. Productivity in the top education industries grew by over.34 log points between 1989 and 2017. Productivity in the bottom education industries grew only.20 log points during that same 30 year period. The right two bars compare wage growth in those same industries. The same pattern holds, but not with the same force. Wages in highly educated industries grew by.26 log points while those in the low education half grew by.24 log points during the 1989-2017 period. The difference in productivity between the groups is more pronounced than the difference in wages. This simple comparison suggests that productivity growth differences between groups is more than sufficient to explain the better wage growth that more educated workers enjoyed as compared with less educated workers….”

This is supported by his Figure 2 figure for the cross country comparisons, which mirrors our relationship btw skill and hourly wage (which was the OECD math/hourly wage data) which we used in the chapter and Figure 9 is his charting of the change in the relationship btw productive and wages in the US by skill level

"....There is compelling evidence that productivity and wages are linked. The pattern is clear in cross-country comparisons and for virtually all individual countries over time. Furthermore, all parts of the income distribution seem to benefit from increases in aggregate productivity. The mean wage rises as does the wage of the lowest wage earners and highest wage earners when productivity increases. It is also true that wages have spread out over time in most OECD countries where data are available. The ratio of wages of the 90th percentile worker to the median worker has risen in 15 out of 17 countries between 1997 and 2015. In the United States, this is apparent not only in percentiles, but in returns to education. The education coefficient in log wage regressions is significantly higher in 2017 than it is in 1989…”

He uses several series as proxies for productivity, though he does note in terms of individuals, “It is virtually impossible to measure individual productivity except in some firm-based data where measures of output are readily available”For outside the US“…The productivity data are from the OECD Compendium of Productivity Indicators….”Where the “GDP per hour worked” series lives. For the US he uses BLS’s “Nonfarm Business Sector: Real Output Per Hour of All Persons” At the industry level for the US he uses data from The Division of Industry Productivity Studies (DIPS) in the Office of Productivity and Technology at the Bureau of Labor Statistics who have an industry series “Labor Productivity and Costs Measures” which has value added per hour in absolute terms and a productivity index.

AI Summary. Across OECD countries, adult skill levels are associated with wage disparities, with individuals scoring higher in literacy and numeracy earning on average 20% more than those with lower proficiency. The data also indicate that a 1% increase in skill proficiency is associated with a 0.3% rise in GDP per person.

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Data from @OECD highlights a significant correlation btw skill levels & wage disparities across OECD countries. Individuals with higher literacy & numeracy skills earn 20% more than those with lower skills.

Do higher adult literacy and numeracy skills raise wages and GDP?

Core argument: OECD PIAAC data show individuals with higher literacy and numeracy proficiency earn on average 20% more than those with lower skills, a wage premium correlated with skill levels across OECD countries.

The PIAAC [Programme for the International Assessment of Adult Competencies] data reveals a significant correlation between skill levels and wage disparities across OECD countries. Individuals with higher proficiency in literacy and numeracy earn, on average, 20% more than those with lower skills. This wage premium underscores the economic value of skill acquisition in the labor market. Furthermore, the data indicates that a 1% increase in skill proficiency can lead to a 0.3% rise in GDP per capita, highlighting the macroeconomic benefits of investing in education and training. The findings suggest that policy makers should prioritize skill development to enhance productivity and economic growth, addressing wage inequality and fostering a more competitive workforce.

Takeaways by Macro Roundup® AI

  1. OECD PIAAC data show individuals with higher literacy and numeracy proficiency earn on average 20% more than those with lower skills, a wage premium correlated with skill levels across OECD countries.
  2. The PIAAC data indicate that a 1% increase in skill proficiency is associated with a 0.3% rise in GDP per capita, pointing to macroeconomic benefits from investment in education and training.
  3. The PIAAC findings suggest policy makers should prioritize skill development to raise productivity and economic growth while addressing wage inequality and building a more competitive workforce.

Marieke Vandeweyer, "OECDL Survey Of Adult Skills,” Organisation for Economic Co-operation and Development, August 8, 2019, https://www.oecd.org/skills/piaac/

AI Summary. The OECD measures average annual hours worked per worker, counting regular hours, paid and unpaid overtime, and additional jobs while excluding holidays and leave, and advises using the series for trend analysis rather than year-to-year comparisons. On household gross adjusted disposable income per person, adjusted for purchasing power, the US is ~30% above Germany.

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OECD data on average annual hours worked per worker provides insights into labor trends across member countries, crucial for understanding economic productivity and labor market dynamics.

How do hours worked and household income compare across advanced economies?

Core argument: Household gross adjusted disposable income, which includes transfers in kind such as healthcare and education and is measured in USD per capita at current prices and purchasing power parities, is about 30% higher in the US than in Germany.

The OECD data on average annual hours worked per worker provides insights into labor trends across member countries. This metric includes regular work hours, paid and unpaid overtime, and additional jobs, while excluding time not worked due to various reasons like holidays and leave. The data is crucial for understanding economic productivity and labor market dynamics, though it is advised for trend analysis rather than direct year-to-year comparisons due to methodological differences. Additionally, household gross adjusted disposable income, which accounts for transfers in kind such as healthcare and education, is measured in USD per capita at current prices andppPs [Purchasing Power Parities]. This income measure shows the US earning ~30% more than Germany, highlighting disparities in income distribution when adjusted for hours worked. The relationship between skills, wages, and hours worked is further explored through PIAAC [Programme for the International Assessment of Adult Competencies] skill and wage charts, emphasizing the importance of skill levels in economic outcomes.

Takeaways by Macro Roundup® AI

  1. Household gross adjusted disposable income, which includes transfers in kind such as healthcare and education and is measured in USD per capita at current prices and purchasing power parities, is about 30% higher in the US than in Germany.
  2. OECD average annual hours worked per worker counts regular hours, paid and unpaid overtime, and additional jobs while excluding time off for holidays and leave, and suits trend analysis rather than year-to-year comparison because of methodological differences.
"...Average annual hours worked is defined as the total number of hours actually worked per year divided by the average number of people in employment per year. Actual hours worked include regular work hours of full-time, part-time and part-year workers, paid and unpaid overtime, hours worked in additional jobs, and exclude time not worked because of public holidays, annual paid leave, own illness, injury and temporary disability, maternity leave, parental leave, schooling or training, slack work for technical or economic reasons, strike or labour dispute, bad weather, compensation leave and other reasons. The data cover employees and self-employed workers. This indicator is measured in terms of hours per worker per year. The data are published with the following health warning:The data are intended for comparisons of trends over time; they are unsuitable for comparisons of the level of average annual hours of work for a given year, because of differences in their sources and method of calculation...."

"...Household gross adjusted disposable incomeis the income adjusted for transfers in kind receivedby households, such health or education provided for free or at reduced prices by government and NPISHs. This indicator is presented both in terms of annual growth rates (for real net disposable income)and in terms of USD per capita at current prices andppPs (gross adjusted disposable income).All OECD countries compile their data according to the 2008 System of National Accounts (SNA 2008)...."

Note this series should be capturing health care, "...Household gross adjusted disposable income is the income adjusted for transfers in kind received by households, such health or education provided for free or at reduced prices by government and NPISHs....."

https://data.oecd.org/emp/hours-worked.htm

We need hours worked per household to get “Household gross adjusted disposable income” per hour worked. They might have it directly. The might have workers per household and hours per worker

Yes, my read of the definition is they are using "per capita" to refer to the individual household units in the household series,

I thought we looked at per family not per capita $50,203 is way too high to be per capita (i.e. every living person).

Okay, so you would like thehousehold gross disposable incomemeasure (50,203 for US and 38,996 for Germany so ~ 30% higher) adjusted for hours worked. it is in US/dollars/capita so that's average.

PS see if you can get the data on disposable income per family that shows the US earning 30% more than Germany, by hour worked instead of per family. Check if it’s median or average (I think it’s average.) That would allow us to make an estimated conversion from hourly wage to disposable income accounting for healthcare, at least at the median (or average)

Three charts. The first is all countries, including the US with ethnicity for P10/P50/P90 without a regression. The second chart is the same series with a regression though all points. The third chart is the second chart with the US points and average of non-US countries removed.

The charts have the same scale and dimensions for easy comparison.

Note we are using P50 as requested, not mean with the second run of cleaned up data OECD provided. It remains a strong relationship, including the US the R2 is.8123, without the US points the R2 increases to.868.

I understand, while I have hours worked, (Total hours/worker) but I don't have the # of workers per household yet.

Do you have total number of households and or total number of workers or total hours of work?

AI Summary. US hourly wage inequality is wide by international comparison, with white US workers showing a 90th-to-10th percentile wage ratio of $53.06 to $10.83 in international adult skills survey data. The analysis compares numeracy proficiency and purchasing-power-adjusted hourly wages to weigh cognitive skills against institutional factors, though small sample sizes for Black and Hispanic workers may limit reliability.

Date Posted:
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US wage inequality is high, particularly when analyzed by race. Data from PIAAC shows US whites have a P90/P10 wage ratio of 53.06/10.83, a wide gap btw high and low earners.

Do cognitive skills or institutions explain high US wage inequality?

Core argument: PIAAC data show US whites with P90/P10 hourly wages of $53.06 to $10.83, a wide gap between high and low earners.

The disparity in hourly wages in the US, particularly when analyzed by race, highlights significant wage inequality compared to OECD countries. Data from the PIAAC [Programme for the International Assessment of Adult Competencies] shows that US whites have a P90/P10 wage ratio of 53.06/10.83, indicating a wide gap between high and low earners. This contrasts with smaller sample sizes for Blacks and Hispanics, which may affect the reliability of comparisons. The analysis uses numeracy proficiency and hourly wages expressed inppP [Purchasing Power Parity] to draw comparisons. The regression analysis includes all data points, underscoring the role of cognitive skills and institutional factors in driving wage inequality. The upcoming release of new US data with larger sample sizes may provide further insights into these disparities.

Takeaways by Macro Roundup® AI

  1. PIAAC data show US whites with P90/P10 hourly wages of $53.06 to $10.83, a wide gap between high and low earners.
  2. The PIAAC-based analysis compares numeracy proficiency with hourly wages expressed in purchasing power parity terms, with regressions including all data points, to weigh cognitive skills against institutional factors in wage inequality.
  3. Smaller PIAAC sample sizes for Blacks and Hispanics may affect the reliability of comparisons, and forthcoming US data with larger samples may offer further insight into these disparities.

Breaking embargo on sending you things as I finally got the PIAAC/Hourly Wage data by race for the US that you have been looking for. Stijn and his colleague Marieke @ OECD were kind enough to carve it out for us as it's not available publicly via the data portal. They cautioned that the sample size is small for Blacks and Hispanics (N=357/308 versus almost 2000 for whites) however they also noted they will have new US data this November with a much larger sample size. This is the same series (numeracy proficiency) and hourly wages (USD, expressed inppP) that they used in their paper we've been using. I've plotted the new points on a chart against the other countries; note the regression is currently capturing all points including the US. Striking:

Why is wage inequality so high in the United States? Pitching cognitive skills against institutions (once again): Extended Excerpt Image 1


Needed to flag one thing. When Marieke pulled the data for us she included Mean/P90/P50/P10 hourly wages, not just the ratios like they did in their paper. For example for P90/P10 US whites she has 43.00 and 8.75. However our calculated P90 P10 numbers for US whites are 53.06 and 10.83. Our mean number is the same as theirs as we pulled it from their paper. We calculating our P90 hourly wage by multiplying the mean US (provided) by their P90/P50 ratio (provided) and calculated our P10 hourly wage by dividing the mean (provided) by their P50/P10 ratio (provided). Anyway I asked if she could send me her data and she did. So I created two charts, the first is ours, the second is just using the plugged in OECD data.

Why is wage inequality so high in the United States? Pitching cognitive skills against institutions (once again): Extended Excerpt Image 2


Why is wage inequality so high in the United States? Pitching cognitive skills against institutions (once again): Extended Excerpt Image 3


Why is wage inequality so high in the United States? Pitching cognitive skills against institutions (once again): Extended Excerpt Image 4


Stijn Broecke, Glenda Quintini and Marieke Vandeweyer, "Why is wage inequality so high in the United States? Pitching cognitive skills against institutions (once again)," Organisation for Economic Co-operation and Development, September 4, 2015, https://editorialexpress.com/cgi-bin/conference/download.cgi