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The Effect of Labor Market Institutions on Salaried and Self-Employed Less-Educated Men in the 1980S

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  • Harry Krashinsky

Abstract

Less-educated workers exhibited negative real wage growth from the late 1970s to the early 1990s. Frequently cited to explain this pattern are such labor market trends as union decline and the falling real value of the minimum wage, but also of concern is the possible contribution of decreased demand, caused by factors such as skill-biased technological change. To investigate the relative importance of these determinants, the author, using CPS data, compares the experiences of wage-and-salary workers with those of the self-employed. Wages apparently declined little for less-educated self-employed workers, but greatly for similar wage-and-salary workers. Because self-employed workers are affected by the same demand shocks as wage-and-salary workers but are not subject to labor market institutions such as the minimum wage or labor unions, the author concludes that the main source of the observed negative real wage growth was the decline of labor market institutions, not skill-biased technological change.

Suggested Citation

  • Harry Krashinsky, 2008. "The Effect of Labor Market Institutions on Salaried and Self-Employed Less-Educated Men in the 1980S," ILR Review, Cornell University, ILR School, vol. 62(1), pages 73-91, October.
    • Handle: RePEc:sae:ilrrev:v:62:y:2008:i:1:p:73-91
    DOI: 10.1177/001979390806200104
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    References listed on IDEAS

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    2. Hoa Nguyen, 2019. "Impact of Increasing Minimum Wage on Homeownership and Home Equity Loans," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 25(2), pages 209-219, May.

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