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Decomposing Changes In Retail Food Wage Distributions, 1983-1998: A Semi-Parametric Analysis


  • Budd, John W.
  • McCall, Brian P.


What role has the growing practice of eating out rather than at home played in the evolution of wages in retail food? Between 1983 and 1998, real wages fell for nearly all types of grocery store employees, whether they were relatively well paid, poorly paid, or somewhere in the middle. This resulted in an eight and a half percent decrease in the average real wage, but unlike many other industries, there was no increase in wage inequality. The "food away from home trend" is apparently connected to the deterioration in grocery store wages for all employees except those earning somewhere in the top ten percent of wages. Without this change in consumer behavior, average real grocery store wages would have risen by seven percent rather than falling by 12 percent. While harmful to nearly all grocery store employees, this trend has benefited many workers in the restaurant industry, where the average real wage rose by nearly twenty five percent. Because this growth was not evenly distributed, occurring primarily in the upper part of the wage distribution, wage inequality in this segment of retail food increased. Moreover, the increase in the fast food sector during this period is associated with decreasing real wage levels, or slower wage growth, in both the grocery and restaurant industries. The labor market institutions of minimum wage laws and labor unionization are also found to be important determinants of wage trends in retail food. Part-time employment is associated with lower wage outcomes, but over the last 20 years, the frequency of part-time work in these two industries actually declines. Overall, however, labor market institutions and changing demographic characteristics still leave much of the observed changes in real wages in retail food unexplained. The data source for this analysis is the Current Population Survey, supplemented with secondary data sources.

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  • Budd, John W. & McCall, Brian P., 1999. "Decomposing Changes In Retail Food Wage Distributions, 1983-1998: A Semi-Parametric Analysis," Working Papers 14327, University of Minnesota, The Food Industry Center.
  • Handle: RePEc:ags:umrfwp:14327

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    References listed on IDEAS

    1. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed the Labor Market?," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1169-1213.
    2. John W. Budd & Brian P. McCall, 2001. "The Grocery Stores Wage Distribution: A Semi-Parametric Analysis of the Role of Retailing and Labor Market Institutions," ILR Review, Cornell University, ILR School, vol. 54(2A), pages 484-501, March.
    3. Chinhui Juhn, 1999. "Wage Inequality and Demand for Skill: Evidence from Five Decades," ILR Review, Cornell University, ILR School, vol. 52(3), pages 424-443, April.
    4. Peter Gottschalk, 1997. "Inequality, Income Growth, and Mobility: The Basic Facts," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 21-40, Spring.
    5. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
    6. 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.
    7. Gary Burtless, 1995. "International Trade and the Rise in Earnings Inequality," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 800-816, June.
    8. Kinsey, Jean D. & Senauer, Benjamin & King, Robert P. & Phumpiu, Paul F., 1996. "Changes In Retail Food Delivery: Signals For Producers, Processors And Distributors," Working Papers 14352, University of Minnesota, The Food Industry Center.
    9. Wessels, Walter John, 1997. "Minimum Wages and Tipped Servers," Economic Inquiry, Western Economic Association International, vol. 35(2), pages 334-349, April.
    10. George E. Johnson, 1997. "Changes in Earnings Inequality: The Role of Demand Shifts," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 41-54, Spring.
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