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Changes in the Distribution of Wages, 1940-1950: The Public vs. the Private Sector

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Author Info
Robert A. Margo
T. Aldrich Finegan

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Abstract

Between 1940 and 1950 wage differentials within and between labor market groups narrowed significantly - the so-called 'Great Compression'. This paper disaggregates the Great Compression into its public and private components. Wage compression in the public sector, along with a decline in the pay premia received by public sector workers, explains about 40 percent of aggregate wage compression in the 1940s. The experience of the 1940s stands in stark contrast with that of the past two decades, in which a rigid public sector wage structure has dampened increases in aggregate wage inequality.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5389.

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Date of creation: Dec 1995
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Handle: RePEc:nbr:nberwo:5389

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Find related papers by JEL classification:
N32 - Economic History - - Labor and Consumers, Demography, Education, Income, and Wealth - - - U.S.; Canada: 1913-
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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  1. Alan B. Krueger, 1988. "The Determinants of Queues for Federal Jobs," NBER Working Papers 2499, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. 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. [Downloadable!] (restricted)
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  3. Lawrence Katz & Alan Krueger, 1991. "Changes in the Structure of Wages in the Public and Private Sectors," Working Papers 662, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
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  4. repec:fth:prinin:282 is not listed on IDEAS
  5. Steven F. Venti, 1987. "Wages in the Federal and Private Sectors," NBER Chapters, in: Public Sector Payrolls, pages 147-182 National Bureau of Economic Research, Inc. [Downloadable!]
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  6. Finegan, T. Aldrich & Margo, Robert A., 1994. "Work Relief and the Labor Force Participation of Married Women in 1940," The Journal of Economic History, Cambridge University Press, vol. 54(01), pages 64-84, March. [Downloadable!]
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