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War Mobilization and the Great Compression

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  • Scotese Carol A.

    ()
    (Virginia Commonwealth University)

Abstract

During the 1940s, the diversion of 55% of the workforce to wartime production, the induction of over 10 million young men into the armed forces, and the entry of millions of female, young, and elderly workers into the workplace subjected the labor force to large shocks. Also during the 1940s, the wage distribution compressed sharply and the returns to education fell. This paper uses wage changes between occupations to link wartime labor market shocks to the decline in the return to education and the decline in wage inequality. Wartime production favoring semi-skilled labor and the occupation-biased nature of the draft combined to compress both the lower and upper tails of the male wage distribution and the upper portion of the female wage distribution.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 10 (2010)
Issue (Month): 1 (July)
Pages: 1-29

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Handle: RePEc:bpj:bejeap:v:10:y:2010:i:1:n:62

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  1. Nidardo, J. & Fortin, N. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Papers 93-94-15, California Irvine - School of Social Sciences.
  2. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Rising Wage Inequality: The Role of Composition and Prices," Harvard Institute of Economic Research Working Papers 2096, Harvard - Institute of Economic Research.
  3. Goldin, Claudia & Margo, Robert A, 1992. "The Great Compression: The Wage Structure in the United States at Mid-century," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 1-34, February.
  4. Thomas Lemieux, 2006. "Increasing Residual Wage Inequality: Composition Effects, Noisy Data, or Rising Demand for Skill?," American Economic Review, American Economic Association, vol. 96(3), pages 461-498, June.
  5. Paul W. Rhode, 2003. "After the War Boom: Reconversion on the U.S. Pacific Coast, 1943-49," NBER Working Papers 9854, National Bureau of Economic Research, Inc.
  6. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
  7. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
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