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The Collapse of Low-Skill Male Earnings in the 1980s: Skill Mismatch or Shifting Wage Norms?

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  • David R. Howell

    (The Jerome Levy Economics Institute)

Abstract

The most-often stated reason the decline in average real weekly wages among production workers has been that technological advancements have resulted in increased demand for skilled workers, leaving less-skilled workers with fewer job opportunities. In this paper, David R. Howell examines this possibility and concludes that while supply-side changes explain the gains experienced among educated workers, the hypothesis does not prove adequate in explaining the decline in wages experienced among less-educated workers. He also finds that while the demand for jobs requiring problem solving skills rose during the 1980s, the increase was not radically different from changes in the demand for these workers in past decades. Instead, the shift appears to have been not so much a decline in demand for low-skill workers as a rise in the share of low-wage jobs across the skills spectrum. In addition, Howell explains wage restructuring as linked to labor relations factors (such as changes in the terms of trade and declining union strength) rather than a function of production technology. This "shift in wage norms" hypothesis has two main parts: (1) lower wage offers to the same or similar workers for the same or similar work and (2) displacement of higher wage workers.

Suggested Citation

  • David R. Howell, 1999. "The Collapse of Low-Skill Male Earnings in the 1980s: Skill Mismatch or Shifting Wage Norms?," Macroeconomics 9906015, EconWPA.
  • Handle: RePEc:wpa:wuwpma:9906015
    Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 52; figures: included
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    References listed on IDEAS

    as
    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. Chinhui Juhn, 1992. "Decline of Male Labor Market Participation: The Role of Declining Market Opportunities," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 79-121.
    3. Erica L. Groshen, 1988. "Why do wages vary among employers?," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 19-38.
    4. Lawrence F. Katz & Gary W. Loveman & David G. Blanchflower, 1993. "A Comparison of Changes in the Structure of Wages," NBER Working Papers 4297, National Bureau of Economic Research, Inc.
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    JEL classification:

    • E - Macroeconomics and Monetary Economics

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