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Using regional variation to explain widening earnings differentials by educational attainment

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  • David A. Brauer

Abstract

During the 1980s and early 1990s the earnings gap between individuals with a college education and those with no more than a high school diploma widened substantially.Two leading explanations are technological improvement, either by increasing demand for skilled workers or by displacing unskilled and semi-skilled workers, and the effect of increased competition from imports. Since the late 1970s, aggregate wage growth has varied significantly across states and regions. Moreover, while wage differentials have widened in virtually all states and regions, there is considerable variation in the degree and timing of this widening. In this paper we develop indices, based on industry of employment, of technological advancement and of exposure to competition from manufactured imports for each state.These indices are used to test the impact of technological change and trade on earnings differentials by educational attainment.

Suggested Citation

  • David A. Brauer, 1995. "Using regional variation to explain widening earnings differentials by educational attainment," Research Paper 9521, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednrp:9521
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    References listed on IDEAS

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    4. Nickell, Stephen & Nicolitsas, D., 1994. "Wages," LSE Research Online Documents on Economics 51644, London School of Economics and Political Science, LSE Library.
    5. John Bound & George Johnson, 1995. "What are the causes of rising wage inequality in the United States?," Economic Policy Review, Federal Reserve Bank of New York, issue Jan, pages 9-17.
    6. Paul Krugman & Robert Lawrence, 1993. "Trade, Jobs, and Wages," NBER Working Papers 4478, National Bureau of Economic Research, Inc.
    7. George J. Borjas & Valerie A. Ramey, 1993. "Foreign Competition, Market Power and Wage Inequality: Theory and Evidence," NBER Working Papers 4556, National Bureau of Economic Research, Inc.
    8. Jeffrey D. Sachs & Howard J. Shatz, 1994. "Trade and Jobs in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 1-84.
    9. Jaeger, David A, 1997. "Reconciling the Old and New Census Bureau Education Questions: Recommendations for Researchers," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(3), pages 300-309, July.
    10. Jacob Mincer, 1991. "Human Capital, Technology, and the Wage Structure: What Do Time Series Show?," NBER Working Papers 3581, National Bureau of Economic Research, Inc.
    11. Topel, Robert H, 1994. "Regional Labor Markets and the Determinants of Wage Inequality," American Economic Review, American Economic Association, vol. 84(2), pages 17-22, May.
    12. Olivier Jean Blanchard, 1995. "Macroeconomic implications of shifts in the relative demand for skills," Economic Policy Review, Federal Reserve Bank of New York, issue Jan, pages 48-53.
    13. D. Brauer & S. Hickok, 1994. "Explaining the growing gap between low-skilled and high-skilled wages," Research Paper 9418, Federal Reserve Bank of New York.
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    Keywords

    Education ; Wages ; Regional economics;

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