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War Mobilization and the Great Compression

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  • Carol S. Lehr

    ()
    (Department of Economics, VCU School of Business)

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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Bibliographic 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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Keywords: wage inequality; war mobilization; occupation skill;

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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. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
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