Academic journal article Monthly Labor Review

Wage Structure over the Long Run

Academic journal article Monthly Labor Review

Wage Structure over the Long Run

Article excerpt

Since 1980, the wage structure in America has widened markedly. The upper end of the distribution has experienced rapid wage growth relative to the middle and lower parts. This has been in contrast to trends seen during most of the 20th century. Between 1915 and 1950, the wage structure narrowed substantially. Then in the 1950s and 1960s, there was a period of relative stability.

Claudia Goldin and Lawrence F. Katz of Harvard University examine these changing trends and the factors underlying them in, "Long-Run Changes in the U.S. Wage Structure: Narrowing, Widening, Polarizing" (NBER Working Paper 13568). They find that most of the increase in wage inequality that has occurred since 1980 can be explained by rising educational wage differentials. Some researchers have attributed the rise in educational wage differentials of recent years to skill-biased technological change. But Goldin and Katz observe that skill-biased technological change is not something new; as they state, "it has driven rapid secular growth in the relative demand for more-educated workers for at least a century." During part of that time, the supply of skills grew more quickly than the demand for them, mainly due to rising educational attainment. …

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