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The effects of industry employment shifts on U.S. wage structure, 1979-1995

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  • Robert G. Valletta

Abstract

The trend toward increasing U.S. wage inequality during the 1980s is well documented. I investigate the role of employment shifts from goods-producing to service-producing industries in contributing to increased inequality during the period 1979-1995. Earlier analyses revealed that average earnings are lower, and earnings inequality is higher, for service-producing workers than for goods-producing workers. For both reasons, and increasing share of service employment may increase earnings inequality. I analyses the effect of broad industry employment shifts by using a recently developed statistical technique, which I term \"conditionally weighted density estimation.\" This technique enables investigation of the effects of changing industry employment shares on the complete distribution of earnings, conditional on changes in other earnings-related characteristics. The results show at most a small effect of industry employment shifts on growing inequality in male hourly earnings.

Suggested Citation

  • Robert G. Valletta, 1997. "The effects of industry employment shifts on U.S. wage structure, 1979-1995," Economic Review, Federal Reserve Bank of San Francisco, pages 16-32.
    • Handle: RePEc:fip:fedfer:y:1997:p:16-32:n:1
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    1. Karoly, Lynn A, 1996. "Anatomy of the US Income Distribution: Two Decades of Change," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 12(1), pages 76-95, Spring.
    2. 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 410-442, June.
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    4. Karoly, L.A., 1996. "Anatomy of the US Income Distribution: Two Decades of Change," Papers 96-07, RAND - Reprint Series.
    5. 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 1333-1381, September.
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