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The evolution of U.S. earnings inequality: 1961?2002

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  • Zvi Eckstein
  • Éva Nagypál

Abstract

The goal of this article is to summarize the main trends in the earnings and employment distribution in the United States using data drawn from the March Current Population Surveys covering the period between 1961 and 2002. We show that inequality started to increase for men in 1974, and for women in 1981, and for both genders inequality continued to increase throughout 2002. During the same period the wage premium of college graduates over non-college workers increased substantially and the ratio of college educated workers to non-college workers also increased. These facts support the popular skill-biased technical change (SBTC) hypothesis. However, other facts raise some doubts about the SBTC hypothesis. First, the college wage premium is mainly due to workers with a postgraduate degree, but their increase in the labor force started much earlier than the spectacular rise in their wages. Also there has been no marked change in recent decades in the occupational distribution of workers. However, the earning premium of professional over blue collar workers followed the same trend as the college earning premium. And finally, the most dramatic changes in the labor market took place among women.

Suggested Citation

  • Zvi Eckstein & Éva Nagypál, 2004. "The evolution of U.S. earnings inequality: 1961?2002," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Dec, pages 10-29.
  • Handle: RePEc:fip:fedmqr:y:2004:i:dec:p:10-29:n:v.28no.2
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    References listed on IDEAS

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    1. Willis, Robert J., 1987. "Wage determinants: A survey and reinterpretation of human capital earnings functions," Handbook of Labor Economics,in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 10, pages 525-602 Elsevier.
    2. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 733-783, October.
    3. Charles E. Scott & John J. Siegfried, 2017. "American Economic Association Universal Academic Questionnaire Summary Statistics," American Economic Review, American Economic Association, pages 678-680.
    4. Philippe Aghion, 2002. "Schumpeterian Growth Theory and the Dynamics of Income Inequality," Econometrica, Econometric Society, vol. 70(3), pages 855-882, May.
    5. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2003. "Fifty Years of Mincer Earnings Regressions," NBER Working Papers 9732, National Bureau of Economic Research, Inc.
    6. Daron Acemoglu, 2003. "Patterns of Skill Premia," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 199-230.
    7. 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.
    8. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
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    Keywords

    Income distribution;

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