An Empirical Test of the Ergodic Hypothesis: Wealth Distributions in the United States

2017 ◽  
Author(s):  
Yonatan Berman ◽  
Ole Peters ◽  
Alexander Adamou
Keyword(s):  
United States ◽  
Empirical Test ◽  
The United States ◽  
Ergodic Hypothesis

scholarly journals Is There a Male Marital Wage Premium? New Evidence from the United States

2018 ◽  
Vol 83 (4) ◽  
pp. 744-770 ◽  
Author(s):  
Volker Ludwig ◽  
Josef Brüderl
Keyword(s):  
United States ◽  
Panel Data ◽  
Fixed Effects ◽  
Causal Effect ◽  
Empirical Test ◽  
Wage Growth ◽  
The United States ◽  
Wage Premium ◽  
Fixed Effects Model ◽  
Married Men

This study reconsiders the phenomenon that married men earn more money than unmarried men, a key result of the research on marriage benefits. Many earlier studies have found such a “male marital wage premium.” Recent studies using panel data for the United States conclude that part of this premium is due to selection of high earners into marriage. Nevertheless, a substantial effect of marriage seems to remain. The current study investigates whether the remaining premium is really a causal effect. Using conventional fixed-effects models, previous studies statistically controlled for selection based on wage levels only. We suggest a more general fixed-effects model that allows for higher wage growth of to-be-married men. The empirical test draws on panel data from the National Longitudinal Survey of Youth (1979 to 2012). We replicate the main finding of the literature: a wage premium remains after controlling for selection on individual wage levels. However, the remaining effect is not causal. The results show that married men earn more because selection into marriage operates not only on wage levels but also on wage growth. Hence, men on a steep career track are especially likely to marry. We conclude that arguments postulating a wage premium for married men should be discarded.

Wealth Inequality and the Ergodic Hypothesis: Evidence from the United States

2021 ◽  
Author(s):  
Yonatan Berman ◽  
Ole Peters ◽  
Alexander Adamou
Keyword(s):  
United States ◽  
Stationary Distribution ◽  
Historical Data ◽  
Wealth Inequality ◽  
The United States ◽  
Economic Conditions ◽  
Model Parameters ◽  
Ergodic Hypothesis

Many studies of wealth inequality make the ergodic hypothesis that rescaled wealth converges rapidly to a stationary distribution. Under this assumption, changes in distribution are expressed as changes in model parameters, reflecting shocks in economic conditions, with rapid equilibration thereafter. Here we test the ergodic hypothesis in an established model of wealth in a growing and reallocating economy. We fit model parameters to historical data from the United States. In recent decades, we find negative reallocation, from poorer to richer, for which no stationary distribution exists. When we find positive reallocation, convergence to the stationary distribution is slow. Our analysis does not support using the ergodic hypothesis in this model for these data. It suggests that inequality evolves because the distribution is inherently unstable on relevant timescales, regardless of shocks. Studies of other models and data, in which the ergodic hypothesis is made, would benefit from similar tests.

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