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Changes in the Structure of Wages During the 1980's: An Evaluation of Alternative Explanations

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  • John Bound
  • George E. Johnson

Abstract

Between 1979 and 1987 there were three significant changes in the wage structure in the United States. the pecuniary returns to schooling increased by about a third; the wages of older relative to younger workers with relatively low education increased to some extent; and the wages of women relative to men rose by almost ten percent. It is important for policy purposes to know why these changes occurred and whether they are temporary or permanent. The paper investigates several alternative explanations of these wage structure phenomena, including the most popular ones that their principal causes were shifts in the structure of product demand, skilled-labor saving technological change, and changes in the incidence and level of rents received by lower skilled workers. our reading of the evidence suggests that the major cause of the dramatic movements in the wage structure during the 1980's may have been some combination of changes in both production technology and the average relative nonobserved quality of different labor groups.

Suggested Citation

  • John Bound & George E. Johnson, 1989. "Changes in the Structure of Wages During the 1980's: An Evaluation of Alternative Explanations," NBER Working Papers 2983, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:2983
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    References listed on IDEAS

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    1. George J. Borjas, 1987. "Immigrants, Minorities, and Labor Market Competition," ILR Review, Cornell University, ILR School, vol. 40(3), pages 382-392, April.
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    Cited by:

    1. Kim, Kwan S., 1997. "The Political Economy of Income Inequality in the United States," Economic Review, Hitotsubashi University, vol. 48(2), pages 113-127, April.
    2. Juhn, Chinhui & Kim, Dae Il, 1999. "The Effects of Rising Female Labor Supply on Male Wages," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 23-48, January.
    3. Thomas A. Husted, 1991. "Changes In State Income Inequality From 1981 To 1987," The Review of Regional Studies, Southern Regional Science Association, vol. 21(3), pages 249-260, Fall.
    4. Adam, Antonis & Garas, Antonios & Lapatinas, Athanasios, 2019. "Economic complexity and jobs: an empirical analysis," MPRA Paper 92401, University Library of Munich, Germany.
    5. Lawrence F. Katz & Alan B. Krueger, 1991. "Changes in the Structure of Wages in the Public and Private Sectors," Working Papers 662, Princeton University, Department of Economics, Industrial Relations Section..
    6. Francesco Serti & Chiara Tomasi & Antonello Zanfei, 2007. "Exporters, Importers and Two-way Traders: the Links between Internationalization, Skills and Wages," Working Papers 0713, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2007.
    7. Rebekka Christopoulou & Theodora Kosma, 2009. "Skills and Wage Inequality in Greece: Evidence from Matched Employer-Employee Data, 1995-2002," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 26, Hellenic Observatory, LSE.
    8. John Gilbert & Onur A. Koska & Reza Oladi, 2021. "Labor-Eliminating Technology, Wage Inequality and Trade Protectionism," Working Papers in Economics 21/04, University of Canterbury, Department of Economics and Finance.
    9. Sami SAAFI, 2009. "Innovations technologiques, mobilité et demande de main-d’oeuvre qualifiée. Une analyse des industries tunisiennes (Technological innovations, mobility and skilled-labour deamnd : an analysis of tunis," Working Papers 206, Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO / Research Unit on Industry and Innovation.
    10. Diebold, Francis X & Neumark, David & Polsky, Daniel, 1997. "Job Stability in the United States," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 206-233, April.
    11. Lawrence F. Katz & Ana L. Revenga, 1989. "Changes in the Structure of Wages: The U.S. versus Japan," NBER Working Papers 3021, National Bureau of Economic Research, Inc.
    12. Claudia Goldin & Robert A. Margo, 1992. "The Great Compression: The Wage Structure in the United States at Mid-Century," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 1-34.
    13. George J. Borjas & Richard B. Freeman & Lawrence F. Katz, 1992. "On the Labor Market Effects of Immigration and Trade," NBER Chapters, in: Immigration and the Work Force: Economic Consequences for the United States and Source Areas, pages 213-244, National Bureau of Economic Research, Inc.
    14. McKinley L. Blackburn & David E. Bloom, 1994. "Changes in the Structure of Family Income Inequality in the United States and Other Industrial Nationa During the 1980s," NBER Working Papers 4754, National Bureau of Economic Research, Inc.
    15. KAWAGUCHI Daiji & MORI Yuko, 2008. "Stable Wage Distribution in Japan, 1982-2002: A Counter Example for SBTC?," Discussion papers 08020, Research Institute of Economy, Trade and Industry (RIETI).
    16. Alan B. Krueger, 1993. "How Computers Have Changed the Wage Structure: Evidence from Microdata, 1984–1989," The Quarterly Journal of Economics, Oxford University Press, vol. 108(1), pages 33-60.
    17. Andreea Alexandra Piriu, 2022. "Globalization and Gender‐Specific Patterns in Individual Fertility Decisions," Population and Development Review, The Population Council, Inc., vol. 48(1), pages 129-160, March.
    18. Klaus Waelde, 1996. "Lifetime learning, biased technological change and the evolution of wages in the U.S. 1960 - 1990," Labor and Demography 9601001, University Library of Munich, Germany.
    19. Salverda, Wiemer & Checchi, Daniele, 2014. "Labour-Market Institutions and the Dispersion of Wage Earnings," IZA Discussion Papers 8220, Institute of Labor Economics (IZA).
    20. James M. Poterba & Kim S. Rueben, 1994. "The Distribution of Public Sector Wage Premia: New Evidence Using Quantile Regression Methods," NBER Working Papers 4734, National Bureau of Economic Research, Inc.
    21. Alan Barrett & Tim Callan & Brian Nolan, 1997. "The Earnings Distribution and Returns to Education in Ireland, 1987-1994," Papers WP085, Economic and Social Research Institute (ESRI).

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