Revisiting the Great Compression: Wage inequality in the United States, 1940–1960

Seminal work by Goldin and Margo (1992) used the first available microdata samples of the United States decennial census to document the narrowing of the wage structure between 1940 and 1960, a pattern they refer to as the “Great Compression.” We revisit their findings using newly available, substantially enlarged samples of the decennial censuses covering this period. Our findings largely replicate the patterns initially reported by Goldin and Margo. However, differences emerge when estimating rates of return to education and experience for specific groups and in a decomposition exercise. A second goal is to indicate directions for future research that might benefit from the use of the complete count census data.