The recent debate questioning whether unemployment in the 1970s represents sectoral adjustment or cyclical variation is expanded to examine comparable causes of real wage variability. Using Panel Study of Income Dynamics panel data, real wages respond more to persistent sectoral shocks than cyclical shocks in the 1970s, making recent estimates of procyclical wage variability appear weak in perspective. Employing a model of endogenous sector-specific individual skills, older workers earning economic rents are shown to have the greatest wage response to sectoral shocks. These results are consistent with the hypothesis that short run cyclical shocks may be met with hours adjustment, as specified in implicit or explicit contracts, but that persistent shocks require wage adjustment.

The earnings of married women have a more equalizing effect on the distribution of lifetime family earnings (or the expected present value of earnings) than on the distribution of annual family earnings, using Panel Study of Income Dynamics longitudinal data. The intertemporal variability of wives' labor supply causes the correlation between the lifetime earnings of husbands and wives to weaken relative to the correlation between their annual incomes, resulting in lower lifetime inequality. The inequality of potential income (full employment earnings) is found to be much greater for lifetime earnings than average annual earnings, based on alternative endogenous wage-hours models.