  We examine the impact of annual hours worked on annual earnings by
decomposing changes in the real annual earnings distribution into composition,
structural and hours effects. We do so via a nonseparable simultaneous model of
hours, wages and earnings. Using the Current Population Survey for the survey
years 1976--2019, we find that changes in the female distribution of annual
hours of work are important in explaining movements in inequality in female
annual earnings. This captures the substantial changes in their employment
behavior over this period. Movements in the male hours distribution only affect
the lower part of their earnings distribution and reflect the sensitivity of
these workers' annual hours of work to cyclical factors.
