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Regional wage divergence and national wage inequality


  • Keith R. Phillips


Throughout much of the 1980s, wage inequality increased in the United States. Previous research has found that a rise in earnings by educational level and increased wage dispersion across occupations were important factors in the rise in wage inequality. Researchers, however, have noted that much of the rise in wage inequality was left unexplained by the demographic and industry factors that they examined. In this study, Keith R. Phillips extends the analysis by examining the impact on wage inequality of a divergence in regional wages that occurred during the 1980s. ; The author finds that regional shocks, such as the recessions in the oil and farm belts, pushed wages lower in these below-average-wage areas, and increased defense spending pushed up wages in many above-average- wage areas. While these regional shocks increased overall wage inequality, Phillips finds that regional wage divergence accounted for only 2.1 percent to 5 percent of the rise in national wage inequality. Other factors, such as increased wage dispersion across educational and occupational groups and a reduction in the male-female wage gap, played larger roles.

Suggested Citation

  • Keith R. Phillips, 1992. "Regional wage divergence and national wage inequality," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q IV, pages 31-44.
  • Handle: RePEc:fip:fedder:y:1992:i:qiv:p:31-44

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    Cited by:

    1. Joseph H. Haslag & Lori L. Taylor, 1993. "A look at long-term developments in the distribution of income," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Jan, pages 19-30.
    2. Duffy, Neal E., 2001. "The Regional Growth of Manufacturing: Markets, Wages, and Labor Composition," The Review of Regional Studies, Southern Regional Science Association, vol. 31(3), pages 255-276, Winter.
    3. Jason L. Saving, 2017. "Why Haven’t Regional Wages Converged?," Working Papers 1711, Federal Reserve Bank of Dallas.
    4. Gheorghe Zaman & Zizi Goschin, 2014. "Economic Crisis and Wage Divergence: Empirical Evidence from Romania," Prague Economic Papers, Prague University of Economics and Business, vol. 2014(4), pages 493-513.

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    Wages; Income distribution;


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