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War Mobilization and the Great Compression

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Author Info
Carol S. Lehr () (Department of Economics, VCU School of Business)

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Abstract

During the 1940s, the diversion of 55\% of the workforce to war-time 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 workplace subject the labor force to large shocks. Also during the 1940s the wage distribution compressed sharply and the returns to education fell. This paper uses between occupation wage changes to link war-time labor market shocks to the decline in the return to education and to the decline in wage inequality. War-time production favoring less-educated labor along with 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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File URL: http://www.people.vcu.edu/~cslehr/Working%20papers/War%20Mobilization%20&%20Great%20Compression.pdf
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Publisher Info
Paper provided by VCU School of Business, Department of Economics in its series Working Papers with number 0901.

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Length: 67 pages
Date of creation: Feb 2009
Date of revision:
Handle: RePEc:vcu:wpaper:0901

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Related research
Keywords: wage inequality; war mobilization; occupation skill;

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Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-44, September. [Downloadable!] (restricted)
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  2. 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. [Downloadable!]
  3. 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. [Downloadable!] (restricted)
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