Wage and Earnings Inequality Between and Within Occupations: The Role of Labor Supply Articles uri icon

publication date

  • January 2024

start page

  • 1

end page

  • 39

International Standard Serial Number (ISSN)

  • 0304-3932

Electronic International Standard Serial Number (EISSN)

  • 1873-1295


  • We document systematic differences in wage and earnings inequality both between and within occupations and show that these differences are intimately related to systematic differences in labor supply across occupations. We then develop a variant of a Roy model in which earnings are a non-linear function of hours, with the extent of this non-linearity differing across occupations. In our theory, the interplay between heterogeneity in tastes for leisure and occupational differences in non-linearities affects the sorting of workers. Moreover, this interplay is crucial to account for the facts on the distributions of hours, wages, and earnings within and across occupations.


  • Economics


  • labor supply; occupational choice; wage inequality; earnings inequality