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War Mobilization and the Great Compression

Author

Listed:
  • Carol Scotese

    (Department of Economics, VCU School of Business)

Abstract

During the 1940s, the diversion of 55\% of the workforce to war-time production, the induction of over 10 million young men into the armed forces and the entry of millions of female, young and elderly workers into workplace subject the labor force to large shocks. Also during the 1940s the wage distribution compressed sharply and the returns to education fell. This paper uses between occupation wage changes to link war-time labor market shocks to the decline in the return to education and to the decline in wage inequality. War-time production favoring less-educated labor along with the occupation-biased nature of the draft combined to compress both the lower and upper tails of the male wage distribution and the upper portion of the female wage distribution.

Suggested Citation

  • Carol Scotese, 2009. "War Mobilization and the Great Compression," Working Papers 0901, VCU School of Business, Department of Economics.
    • Handle: RePEc:vcu:wpaper:0901
    as

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    References listed on IDEAS

    as
    1. 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.
    2. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Rising Wage Inequality: The Role of Composition and Prices," Harvard Institute of Economic Research Working Papers 2096, Harvard - Institute of Economic Research.
    3. Thomas Lemieux, 2006. "Increasing Residual Wage Inequality: Composition Effects, Noisy Data, or Rising Demand for Skill?," American Economic Review, American Economic Association, vol. 96(3), pages 461-498, June.
    4. Claudia Goldin & Robert A. Margo, 1992. "The Great Compression: The Wage Structure in the United States at Mid-Century," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 1-34.
    5. Paul W. Rhode, 2003. "After the War Boom: Reconversion on the U.S. Pacific Coast, 1943-49," NBER Working Papers 9854, National Bureau of Economic Research, Inc.
    6. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
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    More about this item

    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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