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

  • Nicole M. Fortin
  • Thomas Lemieux

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.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.11.2.75
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Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 11 (1997)
Issue (Month): 2 (Spring)
Pages: 75-96

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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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  1. 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.
  2. Lemieux, T., 1993. "Unions and Wages Inequality in Canada and the United States," Cahiers de recherche 9302, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  3. Adrian Wood, 1995. "How Trade Hurt Unskilled Workers," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 57-80, Summer.
  4. Katz, L.F. & Krueger, A.B., 1991. "Chances In The Structure Of Wages In The Public And Private Sectors," Harvard Institute of Economic Research Working Papers 1547, Harvard - Institute of Economic Research.
  5. Winston, Clifford, 1993. "Economic Deregulation: Days of Reckoning for Microeconomists," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1263-89, September.
  6. Wood Júnior, Thomaz, 1995. "Workers," RAE - Revista de Administração de Empresas, FGV-EAESP Escola de Administração de Empresas de São Paulo (Brazil), vol. 35(2), January.
  7. Riddell, W.C., 1993. "Unionization in Canada and the United States: A Tale of Two Countries," Papers 1993-1, Queen's at Kingston - Sch. of Indus. Relat. Papers in Industrial Relations.
  8. David Card & Francis Kramarz & Thomas Lemieux, 1999. "Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France," Canadian Journal of Economics, Canadian Economics Association, vol. 32(4), pages 843-877, August.
  9. Freeman, Richard B, 1996. "The Minimum Wage as a Redistributive Tool," Economic Journal, Royal Economic Society, vol. 106(436), pages 639-49, May.
  10. Brown, Charles & Gilroy, Curtis & Kohen, Andrew, 1982. "The Effect of the Minimum Wage on Employment and Unemployment," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 487-528, June.
  11. David Card & Thomas Lemieux & W. Craig Riddell, 2004. "Unions and Wage Inequality," Journal of Labor Research, Transaction Publishers, vol. 25(4), pages 519-562, October.
  12. Richard B. Freeman, 1995. "Are Your Wages Set in Beijing?," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 15-32, Summer.
  13. 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.
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  15. Claudia Goldin & Robert A. Margo, 1991. "The Great Compression: The Wage Structure in the United States at Mid- Century," NBER Working Papers 3817, National Bureau of Economic Research, Inc.
  16. Richard B. Freeman, 1978. "Unionism and the Dispersion of Wages," NBER Working Papers 0248, National Bureau of Economic Research, Inc.
  17. J. David Richardson, 1995. "Income Inequality and Trade: How to Think, What to Conclude," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 33-55, Summer.
  18. Nickell, Stephen & Bell, Brian, 1995. "The Collapse in Demand for the Unskilled and Unemployment across the OECD," Oxford Review of Economic Policy, Oxford University Press, vol. 11(1), pages 40-62, Spring.
  19. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, September.
  20. Richard B. Freeman, 1996. "Labor market institutions and earnings inequality," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 157-172.
  21. David Card, 1996. "Deregulation and Labor Earnings in the Airline Industry," NBER Working Papers 5687, National Bureau of Economic Research, Inc.
  22. David Card, 1992. "The Effect of Unions on the Distribution of Wages: Redistribution or Relabelling?," NBER Working Papers 4195, National Bureau of Economic Research, Inc.
  23. Fortin, N.M. & Lemieux, T., 1996. "Rank Regressions, Wage Distributions and the Gender Gap," Cahiers de recherche 9607, Universite de Montreal, Departement de sciences economiques.
  24. Lemieux, Thomas, 1998. "Estimating the Effects of Unions on Wage Inequality in a Panel Data Model with Comparative Advantage and Nonrandom Selection," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 261-91, April.
  25. 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..
  26. A. W. Coats, 1996. "Introduction," History of Political Economy, Duke University Press, vol. 28(5), pages 3-11, Supplemen.
  27. repec:pri:indrel:282 is not listed on IDEAS
  28. Button, Kenneth J & Keeler, Theodore, 1993. "The Regulation of Transport Markets," Economic Journal, Royal Economic Society, vol. 103(419), pages 1017-27, July.
  29. Robert S. Smith, 1988. "Comparable Worth: Limited Coverage and the Exacerbation of Inequality," ILR Review, Cornell University, ILR School, vol. 41(2), pages 227-239, January.
  30. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 367-397.
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