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Cross-Country Patterns of Change in Relative Wages

In: NBER Macroeconomics Annual 1992, Volume 7

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  • Steven J. Davis

Abstract

This paper investigates movements in relative wages and wage inequality across thirteen of the world's major economies. Focusing on wages received by full-time male workers, the investigation uncovers several empirical regularities: (1) Most advanced industrialized economies show increases, often large. in wage inequality during the 19805; none show declining wage inequality. In contrast. three of four middle income countries considered here show sharply declining wage inequality during the 1980s. (2) Since the early to late 19705, the advanced economies show large and persistent increases in the wages of prime age men relative to the wages of less experienced men. (3) Following a period of sharply declining education differentials in the 1970s, the advanced economies show rising or flat education differentials after 1980. Education differentials fell moderately to sharply in the middle income countries during the 1980s. (4) Wage inequality among observationally similar workers rose sharply during the 1980s in most advanced economies. (5) After 1915, the structure of relative industry wages in the manufacturing sector became increasingly dissimilar across the advanced economies. However. controlling for common time effects, increases in international trade as a fraction of GOP are associated with a partial convergence of relative industry wage structures across countries. The paper discusses several alternative interpretations of wage structure developments in the United States and other countries in the light of these empirical regularities.

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This chapter was published in:

  • Olivier Jean Blanchard & Stanley Fischer, 1992. "NBER Macroeconomics Annual 1992, Volume 7," NBER Books, National Bureau of Economic Research, Inc, number blan92-1, Ekim.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 10994.

    Handle: RePEc:nbr:nberch:10994

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    1. Richard B. Freeman, 1991. "How Much Has De-Unionisation Contributed to the Rise in Male Earnings Inequality?," NBER Working Papers 3826, National Bureau of Economic Research, Inc.
    2. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
    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, MIT Press, vol. 107(1), pages 1-34, February.
    4. George J. Borjas & Richard B. Freeman & Lawrence F. Katz, 1992. "On the Labor Market Effects of Immigration and Trade," NBER Chapters, in: Immigration and the Workforce: Economic Consequences for the United States and Source Areas, pages 213-244 National Bureau of Economic Research, Inc.
    5. Krueger, Alan B, 1993. "How Computers Have Changed the Wage Structure: Evidence from Microdata, 1984-1989," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 108(1), pages 33-60, February.
    6. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, Ekim.
    7. Steve J. Davis & John Haltiwanger, 1991. "Wage Dispersion Between and Within U.S. Manufacturing Plants, 1963-1986," NBER Working Papers 3722, National Bureau of Economic Research, Inc.
    8. Peter Kuhn & Ian Wooton, 1991. "Immigration, International Trade, and the Wages of Native Workers," NBER Chapters, in: Immigration, Trade, and the Labor Market, pages 285-304 National Bureau of Economic Research, Inc.
    9. Revenga, Ana L, 1992. "Exporting Jobs? The Impact of Import Competition on Employment and Wages in U.S. Manufacturing," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(1), pages 255-84, February.
    10. 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, University of Chicago Press, vol. 101(3), pages 410-42, June.
    11. Kwark, N.S. & Rhee, C., 1992. "Educational Wage Differential in Korea," RCER Working Papers 318, University of Rochester - Center for Economic Research (RCER).
    12. Katz, Lawrence F. & Revenga, Ana L., 1989. "Changes in the structure of wages: The United States vs Japan," Journal of the Japanese and International Economies, Elsevier, vol. 3(4), pages 522-553, December.
    13. Richard B. Freeman & Lawrence F. Katz, 1991. "Industrial Wage and Employment Determination in an Open Economy," NBER Chapters, in: Immigration, Trade, and the Labor Market, pages 235-259 National Bureau of Economic Research, Inc.
    14. Richard B. Freeman & Karen Needels, 1991. "Skill Differentials in Canada in an Era of Rising Labor Market Inequality," NBER Working Papers 3827, National Bureau of Economic Research, Inc.
    15. Murphy, Kevin M & Welch, Finis, 1992. "The Structure of Wages," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(1), pages 285-326, February.
    16. Lawrence F. Katz & Gary W. Loveman & David G. Blanchflower, 1993. "A Comparison of Changes in the Structure of Wages," NBER Working Papers 4297, National Bureau of Economic Research, Inc.
    17. Lam, David & Levison, Deborah, 1991. "Declining inequality in schooling in Brazil and its effects on inequality in earnings," Journal of Development Economics, Elsevier, vol. 37(1-2), pages 199-225, November.
    18. Jacob Mincer, 1991. "Human Capital, Technology, and the Wage Structure: What Do Time Series Show?," NBER Working Papers 3581, National Bureau of Economic Research, Inc.
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