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Changes in Earnings Differentials in the 1980s: Concordance, Convergence, Causes, and Consequence

Author

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  • McKinley L. Blackburn
  • David E Bloom
  • Richard B Freeman

Abstract

This paper analyzes changes in U.S. earnings differentials in the 1980s between race, gender, age, and schooling groups. There are four main sets of results to report. First, the economic position of less-educated workers declined relative to the more-educated among almost all demographic groups. Education-earnings differentials clearly rose for whites, but less clearly for blacks, while employment rate differences associated with education increased more for blacks than for whites. Second, much of the change in education-earnings differentials for specific groups is attributable to measurable economic factors: to changes in the occupational or industrial structure of employment; to changes in average wages within industries; to the fall in the real value of the minimum wage and the fall in union density; and to changes in the relative growth rate of more educated workers. Third, the earnings and employment position of white females, and to a lesser extent of black females, converged to that of white males in the 1980s, across education groups. At the same time, the economic position of more-educated black males appears to have worsened relative to their white-male counterparts. Fourth, there has been a sizable college-enrollment response to the rising relative wages of college graduates. This response suggests that education-earnings differentials may stop increasing, or even start to decline, in the near future.

Suggested Citation

  • McKinley L. Blackburn & David E Bloom & Richard B Freeman, 1991. "Changes in Earnings Differentials in the 1980s: Concordance, Convergence, Causes, and Consequence," Economics Working Paper Archive wp_61, Levy Economics Institute.
  • Handle: RePEc:lev:wrkpap:wp_61
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    References listed on IDEAS

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    1. Allen, Steven G, 2001. "Technology and the Wage Structure," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 440-483, April.
    2. Richard B. Freeman, 1975. "Overinvestment in College Training?," Journal of Human Resources, University of Wisconsin Press, vol. 10(3), pages 287-311.
    3. 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.
    4. 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.
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    Cited by:

    1. Lofstrom, Magnus, 2000. "A Comparison of the Human Capital and Signaling Models: The Case of the Self-Employed and the Increase in the Schooling Premium in the 1980's," IZA Discussion Papers 160, Institute for the Study of Labor (IZA).
    2. Kane, Thomas J, 1994. "College Entry by Blacks since 1970: The Role of College Costs, Family Background, and the Returns to Education," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 878-911, October.

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