Returns vs. Endowments in the Earnings Attainment Process for Metropolitan and Nonmetropolitan Men and Women¹

Abstract

Three explanations typically are offered for differences in earnings: (1) individuals have different levels of human capital and hold different jobs (endowments differ), (2) rewards to human capital and job characteristics differ (returns differ), and (3) some combination of differences in endowments and returns explain variations in earnings. We argue that the structure of labor markets in nonmetropolitan (nonmetro) areas differs from that in metropolitan (metro) areas such that returns, as well as endowments, vary. These variations in returns favor metropolitan workers, explaining the predominant portion of the metro/nonmetro earnings gap. We examine the earnings differences for metro and nonmetro men and women in both 1977 and 1987, showing that returns outweigh endowments in explaining that gap for both men and women, although their importance decreases over the ten‐year period. Research to improve our understanding of how differences in labor market structure produce differential returns has begun and may yield yet another avenue for action for policymakers interested in reducing metro/nonmetro inequalities.

Poverty in the Texas borderland and lower Mississippi Delta: A comparative analysis of differences by family type

“…Poverty rates among single female-headed families are also shown to be higher where a greater proportion of the population is under 15 years of age and for nonmetro areas. The first finding points to the linkages between the "feminization" and "juvenilization" of poverty (Bianchi 1999), while the latter is suggestive of the fact that rural women receive lower labor market returns (i.e., earnings) for their human capital and occupation compared to their urban counterparts (McLaughlin and Perman 1991) and face more restricted employment opportunities. Last, we tested two-way interactions between the Borderland dummy variable and each of the other independent variables, but found no significant interaction effects associated with poverty among single female-headed families.…”

On the Fringe: Family-Friendly Benefits and the Rural–Urban Gap Among Working Women

“…Previous studies showed that rural women have fewer stable employment opportunities and earn less than urban women (Lichter 1989;McLaughlin and Perman 1991;Wells 2002). Our study highlights yet another aspect of inequality among these two groups of women-inequality in access to family-friendly benefits.…”

“…Lichter (1989) found that rural women were more likely to experience underemployment than urban women. Even after controlling for education, urban women earn more than rural women (McLaughlin and Perman 1991;Smith and Glauber 2013). Despite this rich tradition of research on rural-urban inequality among women, we know very little about ruralurban inequality in family-friendly benefits.…”

“…These trends continued during the 1980s (DiPrete 1993;Mishel and Frankel 1991), during which time rural labor markets became more fragmented than urban labor markets, with fewer jobs available in better paying industries (Bloomquist 1990). The rural economic growth of the 1980s was centered in low-skill industries (Lichter 1989), and rural women continued to earn less than their urban counterparts (McLaughlin and Perman 1991).…”

“…Fewer employment opportunities exist for rural women, as rural economies lack the diversity of urban economies (Bloomquist 1990;Bokemeier and Tickamyer 1985). Rural women also earn less than urban women (McLaughlin and Perman 1991;Smith and Glauber 2013). Most of this scholarship, however, has not considered the importance of family-friendly benefits.…”