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Institutional Changes and Rising Wage Inequality: Is There a Linkage?

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  • Nicole M. Fortin
  • Thomas Lemieux

Abstract

In this paper, the authors analyze the role of three institutional changes--the decline in the real value of the minimum wage, deunionization, and economic deregulation--on the rise in wage inequality in the United States during the 1980s. They argue that about a third of the increase in male and female wage inequality can be traced to these institutional changes. Deunionization had a significant effect on the rise in inequality for men, while the minimum wage is what matters most for women. The authors find the direct impact of economic deregulation to be comparatively small.

Suggested Citation

  • Nicole M. Fortin & Thomas Lemieux, 1997. "Institutional Changes and Rising Wage Inequality: Is There a Linkage?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 75-96, Spring.
  • Handle: RePEc:aea:jecper:v:11:y:1997:i:2:p:75-96
    Note: DOI: 10.1257/jep.11.2.75
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.11.2.75
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    References listed on IDEAS

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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