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

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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 tall 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 Consequences," NBER Working Papers 3901, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3901
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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. 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.
    3. 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.
    4. 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.
    5. Katz, Lawrence F. & Revenga, Ana L., 1989. "Changes in the structure of wages: The United States vs Japan," Journal of the Japanese and International Economies, Elsevier, vol. 3(4), pages 522-553, December.
    6. Richard B. Freeman, 1975. "Overinvestment in College Training?," Journal of Human Resources, University of Wisconsin Press, vol. 10(3), pages 287-311.
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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 of Labor Economics (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.
    3. Macunovich, D.J., 1996. "Cohort Size Effects on US Enrollment Decisions," Williams Project on the Economics of Higher Education DP-36, Department of Economics, Williams College.

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