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Lawrence F Katz - One of the best experts on this subject based on the ideXlab platform.
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long run changes in the Wage Structure narrowing widening polarizing
Brookings Papers on Economic Activity, 2008Co-Authors: Claudia Goldin, Lawrence F KatzAbstract:FROM THE CLOSE OF WORLD WAR II TO 1970--the year the Brookings Papers on Economic Activity commenced publication--America enjoyed widespread prosperity. Not only did the national economy grow rapidly, driven by robust productivity growth, but all parts of the income distribution expanded at fairly similar rates. America was "growing together." But in the mid-1970s economic growth slowed. By the early 1980s the Wage Structure had begun a period of widening that has lasted until the present day. Even though productivity growth surged again starting in the mid-1990s, the benefits of economic growth have been concentrated at the top end of the distribution. (1) America has been "growing apart." These "growing together" and "growing apart" patterns are evident in figure 1, which compares real income growth across the family income distribution for the postwar period before 1973 with that after 1973. Before 1973, real income growth was a bit faster near the bottom of the distribution and somewhat slower near the top, making the changes modestly equalizing. In sharp contrast, from 1973 to 2005 family incomes virtually stagnated for the lowest quintile but grew more than three times as rapidly for the top 5 percent as for the middle quintile. [FIGURE 1 OMITTED] Since most Americans make their living from work, it should not come as a surprise that changes in the labor market and the distribution of Wages have been the driving force behind the rising disparity in the economic fortunes of American families. (2) In this paper we document the nature of rising U.S. Wage inequality since 1980 and place the recent changes within a century-long historical perspective to understand the sources of change. The widening of the Wage Structure that began in the early 1980s differed markedly from the Wage Structure changes of the early to mid-twentieth century. The Wage Structure narrowed substantially during the first half of the twentieth century and was relatively stable during the 1950s and 1960s. The spreading out of the Wage Structure since 1980 occurred in two stages. From 1980 to around 1987, Wage inequality increased in a rapid and monotonic fashion: Wages at the top grew most rapidly, those in the middle less rapidly, and those at the bottom the least of all. Since the late 1980s, Wages at the upper end of the distribution have continued to grow rapidly relative to the middle, but the lower end has not lost out relative to the middle. These recent Wage Structure changes have been associated with a polarization of the labor market, with employment shifting into high- and low-Wage jobs at the expense of middle-Wage positions. (3) Why has the Wage Structure widened so much since 1980? A popular explanation attributes the primary role to an increase in the rate of growth in relative demand for more-skilled workers, due to skill-biased technological change and a reorganization of work driven by the spread of computer-based technologies. (4) Globalization pressures, eroding labor market institutions, and changes in the social norms that constrain pay disparities have also been offered as explanations, and each appears to have played some role? Our focus is on reassessing the skill-biased technological change hypothesis in a long-run historical context. Skill-biased technological change is not a new phenomenon. Rather, it has driven rapid secular growth in the relative demand for more-educated workers for at least a century. During most of the twentieth century, the narrowing of the Wage Structure came about largely because the supply of skills grew faster than did the demand for skills. Growth in the relative demand for skills was produced largely by skill-biased technological change. Growth in the supply of skills was due primarily to the rising educational attainment of successive cohorts. That, in turn, was fueled by increased access to public high schools and later to colleges and universities. …
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long run changes in the u s Wage Structure narrowing widening polarizing
National Bureau of Economic Research, 2007Co-Authors: Claudia Goldin, Lawrence F KatzAbstract:The U.S. Wage Structure evolved across the last century: narrowing from 1910 to 1950, fairly stable in the 1950s and 1960s, widening rapidly during the 1980s, and "polarizing" since the late 1980s. We document the spectacular rise of U.S. Wage inequality after 1980 and place recent changes into a century-long historical perspective to understand the sources of change. The majority of the increase in Wage inequality since 1980 can be accounted for by rising educational Wage differentials, just as a substantial part of the decrease in Wage inequality in the earlier era can be accounted for by decreasing educational Wage differentials. Although skill-biased technological change has generated rapid growth in the relative demand for more-educated workers for at least the past century, increases in the supply of skills, from rising educational attainment of the U.S. work force, more than kept pace for most of the twentieth century. Since 1980, however, a sharp decline in skill supply growth driven by a slowdown in the rise of educational attainment of successive U.S. born cohorts has been a major factor in the surge in educational Wage differentials. Polarization set in during the late 1980s with employment shifts into high- and low-Wage jobs at the expense of the middle leading to rapidly rising upper tail Wage inequality but modestly falling lower tail Wage inequality.
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changes in the Wage Structure and earnings inequality
Handbook of Labor Economics, 1999Co-Authors: Lawrence F Katz, David H AutorAbstract:This chapter presents a framework for understanding changes in the Wage Structure and overall earnings inequality. The framework emphasizes the role of supply and demand factors and the interaction of market forces and labor market institutions. Recent changes in the US Wage Structure are analyzed in detail to highlight crucial measurement issues that arise in studying Wage Structure changes and to illustrate the operation of the supply-demand-institution framework. The roles of skill-biased technological change, globalization forces, changes in demographics and relative skill supplies, industry labor rents, unions, and the minimum Wage in the evolution of the US Wage Structure are examined. Recent Wage Structure changes are placed in a longer-term historical perspective, and differences and similarities in Wage Structure changes among OECD nations are assessed.
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technology skill and the Wage Structure insights from the past
The American Economic Review, 1996Co-Authors: Claudia Goldin, Lawrence F KatzAbstract:Recent technological advances and a widening of the Wage Structure have led many to conclude that technology and human capital are relative complements. The possibility that such a relationship exists today has prompted a widely held conjecture that technology and skill have always been relative complements. According to this view, technological advance always serves to widen the Wage Structure, and only large injections of education slow its relentless course. A related literature demonstrates that capital and skill are relative complements today and in the recent past (Zvi Griliches, 1969). Thus capital deepening appears also to have increased the relative demand for the educated, serving further to stretch the Wage Structure. Physical capital and technology are now regarded as the relative complements of human capital, but have they been so for the past two centuries? Some answers have already been provided. A literature has emerged on the bias to technological change across history that challenges the view that physical capital and human capital have always been relative complements. Many of the major technological advances of the 19th century substituted physical capital, raw materials, and unskilled labor for highly skilled artisans (John A. James and Jonathan S. Skinner, 1985). But if physical capital and human skill were not always relative complements, when did they become so, and when did new technology become skilled labor's complement? We argue that capital-skill complementarity was manifested in the aggregate economy as particular technologies spread, specifically batch and continuous-process methods of production. Across the past two centuries, manufacturing shifted first from artisanal to mechanized and nonmechanized factory production, then from simple factories to assembly lines, and finally from assembly lines to continuous and batch processes. Although few products were manufactured by more than two of the technologies mentioned, manufacturing, as a whole, progressed in the fashion described. In considering our argument it is useful to envision manufacturing as having two distinct stages: (i) a machine-installation and machine-maintenance segment and (ii) a production or assembly portion. Capital and educated (skilled) labor, we will argue, are always complements in the machine-maintenance segment of manufacturing, regardless of the technology. Machinists, for example, are needed to install machinery and make it run. The workable capital created by skilled labor plus raw capital is then used by unskilled labor to create the final product in the production or assembly segment of manufacturing. How the adoption of a technology alters the relative demand for skilled workers will depend on whether the machinemaintenance demand for skilled labor is offset by the production-process demand for unskilled labor.
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Understanding Recent Changes in the Wage Structure
1992Co-Authors: Lawrence F KatzAbstract:Increases in family income inequality during the 1980s have received prominent media attention over the last year. Some of the media focus on this topic clearly reflects election-year politics. But popular interest in income distribution also reflects the concerns of many Americans that the economic expansion of the mid- to late 1980s failed to benefit a substantial fraction of American families by enough to offset the losses incurred during the recessions of the early 1980s. In fact, data from the Bureau of the Census indicate that the real money incomes of the bottom 40 percent of American families were essentially no higher in 1989 than the incomes of the bottom 40 percent of families a decade earlier. In contrast, the incomes of the upper 20 percent of families in 1989 were almost 20 percent higher than those of the analogous families in 1979.(1) The enormous disparities in the fortunes of American families in the 1980s largely have been associated with labor market changes that have increased overall Wage inequality and altered the Wage Structure in favor of more-educated and more-skilled workers. Although the recent recession of the early 1990s may or may not be remembered as a white collar recession, the expansion of the 1980s was certainly a white collar expansion. Understanding changes in family income inequality requires understanding changes in the Wage Structure. NBER economists have attempted to document and explain recent and historical changes in the U.S. Wage Structure. My remarks focus on the conclusions that can be drawn from this research concerning: 1) the dimensions of recent dramatic Wage Structure changes in the United States; 2) the likely causes of these changes; and 3) the extent to which similar changes are occurring in other advanced industrial nations. A major cause of rising Wage inequality and increased educational Wage differentials since the 1970s is a strong secular shift in relative labor demand favoring more-educated workers and workers with problem-solving skills. This shift in labor demand is driven primarily by two forces: the increased internationalization of the U.S. economy, and skill-biased technological change, associated in part with the computer revolution. Similar changes in relative labor demand favoring more-educated workers appear to have occurred in other OECD countries. But not all OECD nations have experienced sharp increases in Wage dispersion and educational Wage premiums as the United States has. National differences in Wage-setting institutions and in training and education systems appear to lead to quite different changes in Wage Structure in response to a similar set of market-driven shifts in demand. Wage dispersion among both men and women increased substantially in the United States during the 1980s. The hourly earnings of the 90th percentile full-time worker relative to the 10th percentile full-time worker increased by approximately 20 percent for men and 25 percent for women from 1979 to 1989. Changes in the Wage Structure along three dimensions contributed to rising Wage inequality. First, educational and occupational Wage differentials expanded with a particularly sharp rise in the relative earnings of college graduates. The college Wage premium doubled for young workers, with the weekly Wages of young male college graduates increasing by approximately 30 percent relative to those of young males with 12 or fewer years of schooling. Second, the average Wages of older workers increased relative to those of younger workers for those without college degrees. Third, Wage dispersion increased greatly within narrowly defined demographic and skill groups. In other words, Wage dispersion expanded among individuals of the same age, education, and sex, and it expanded among those working in the same industries and occupations. Much of this within-group increase in Wage dispersion involved increases in Wage differentials for "similar" work across establishments in the same industry. …
Claudia Goldin - One of the best experts on this subject based on the ideXlab platform.
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long run changes in the Wage Structure narrowing widening polarizing
Brookings Papers on Economic Activity, 2008Co-Authors: Claudia Goldin, Lawrence F KatzAbstract:FROM THE CLOSE OF WORLD WAR II TO 1970--the year the Brookings Papers on Economic Activity commenced publication--America enjoyed widespread prosperity. Not only did the national economy grow rapidly, driven by robust productivity growth, but all parts of the income distribution expanded at fairly similar rates. America was "growing together." But in the mid-1970s economic growth slowed. By the early 1980s the Wage Structure had begun a period of widening that has lasted until the present day. Even though productivity growth surged again starting in the mid-1990s, the benefits of economic growth have been concentrated at the top end of the distribution. (1) America has been "growing apart." These "growing together" and "growing apart" patterns are evident in figure 1, which compares real income growth across the family income distribution for the postwar period before 1973 with that after 1973. Before 1973, real income growth was a bit faster near the bottom of the distribution and somewhat slower near the top, making the changes modestly equalizing. In sharp contrast, from 1973 to 2005 family incomes virtually stagnated for the lowest quintile but grew more than three times as rapidly for the top 5 percent as for the middle quintile. [FIGURE 1 OMITTED] Since most Americans make their living from work, it should not come as a surprise that changes in the labor market and the distribution of Wages have been the driving force behind the rising disparity in the economic fortunes of American families. (2) In this paper we document the nature of rising U.S. Wage inequality since 1980 and place the recent changes within a century-long historical perspective to understand the sources of change. The widening of the Wage Structure that began in the early 1980s differed markedly from the Wage Structure changes of the early to mid-twentieth century. The Wage Structure narrowed substantially during the first half of the twentieth century and was relatively stable during the 1950s and 1960s. The spreading out of the Wage Structure since 1980 occurred in two stages. From 1980 to around 1987, Wage inequality increased in a rapid and monotonic fashion: Wages at the top grew most rapidly, those in the middle less rapidly, and those at the bottom the least of all. Since the late 1980s, Wages at the upper end of the distribution have continued to grow rapidly relative to the middle, but the lower end has not lost out relative to the middle. These recent Wage Structure changes have been associated with a polarization of the labor market, with employment shifting into high- and low-Wage jobs at the expense of middle-Wage positions. (3) Why has the Wage Structure widened so much since 1980? A popular explanation attributes the primary role to an increase in the rate of growth in relative demand for more-skilled workers, due to skill-biased technological change and a reorganization of work driven by the spread of computer-based technologies. (4) Globalization pressures, eroding labor market institutions, and changes in the social norms that constrain pay disparities have also been offered as explanations, and each appears to have played some role? Our focus is on reassessing the skill-biased technological change hypothesis in a long-run historical context. Skill-biased technological change is not a new phenomenon. Rather, it has driven rapid secular growth in the relative demand for more-educated workers for at least a century. During most of the twentieth century, the narrowing of the Wage Structure came about largely because the supply of skills grew faster than did the demand for skills. Growth in the relative demand for skills was produced largely by skill-biased technological change. Growth in the supply of skills was due primarily to the rising educational attainment of successive cohorts. That, in turn, was fueled by increased access to public high schools and later to colleges and universities. …
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long run changes in the u s Wage Structure narrowing widening polarizing
National Bureau of Economic Research, 2007Co-Authors: Claudia Goldin, Lawrence F KatzAbstract:The U.S. Wage Structure evolved across the last century: narrowing from 1910 to 1950, fairly stable in the 1950s and 1960s, widening rapidly during the 1980s, and "polarizing" since the late 1980s. We document the spectacular rise of U.S. Wage inequality after 1980 and place recent changes into a century-long historical perspective to understand the sources of change. The majority of the increase in Wage inequality since 1980 can be accounted for by rising educational Wage differentials, just as a substantial part of the decrease in Wage inequality in the earlier era can be accounted for by decreasing educational Wage differentials. Although skill-biased technological change has generated rapid growth in the relative demand for more-educated workers for at least the past century, increases in the supply of skills, from rising educational attainment of the U.S. work force, more than kept pace for most of the twentieth century. Since 1980, however, a sharp decline in skill supply growth driven by a slowdown in the rise of educational attainment of successive U.S. born cohorts has been a major factor in the surge in educational Wage differentials. Polarization set in during the late 1980s with employment shifts into high- and low-Wage jobs at the expense of the middle leading to rapidly rising upper tail Wage inequality but modestly falling lower tail Wage inequality.
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technology skill and the Wage Structure insights from the past
The American Economic Review, 1996Co-Authors: Claudia Goldin, Lawrence F KatzAbstract:Recent technological advances and a widening of the Wage Structure have led many to conclude that technology and human capital are relative complements. The possibility that such a relationship exists today has prompted a widely held conjecture that technology and skill have always been relative complements. According to this view, technological advance always serves to widen the Wage Structure, and only large injections of education slow its relentless course. A related literature demonstrates that capital and skill are relative complements today and in the recent past (Zvi Griliches, 1969). Thus capital deepening appears also to have increased the relative demand for the educated, serving further to stretch the Wage Structure. Physical capital and technology are now regarded as the relative complements of human capital, but have they been so for the past two centuries? Some answers have already been provided. A literature has emerged on the bias to technological change across history that challenges the view that physical capital and human capital have always been relative complements. Many of the major technological advances of the 19th century substituted physical capital, raw materials, and unskilled labor for highly skilled artisans (John A. James and Jonathan S. Skinner, 1985). But if physical capital and human skill were not always relative complements, when did they become so, and when did new technology become skilled labor's complement? We argue that capital-skill complementarity was manifested in the aggregate economy as particular technologies spread, specifically batch and continuous-process methods of production. Across the past two centuries, manufacturing shifted first from artisanal to mechanized and nonmechanized factory production, then from simple factories to assembly lines, and finally from assembly lines to continuous and batch processes. Although few products were manufactured by more than two of the technologies mentioned, manufacturing, as a whole, progressed in the fashion described. In considering our argument it is useful to envision manufacturing as having two distinct stages: (i) a machine-installation and machine-maintenance segment and (ii) a production or assembly portion. Capital and educated (skilled) labor, we will argue, are always complements in the machine-maintenance segment of manufacturing, regardless of the technology. Machinists, for example, are needed to install machinery and make it run. The workable capital created by skilled labor plus raw capital is then used by unskilled labor to create the final product in the production or assembly segment of manufacturing. How the adoption of a technology alters the relative demand for skilled workers will depend on whether the machinemaintenance demand for skilled labor is offset by the production-process demand for unskilled labor.
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the great compression the Wage Structure in the united states at mid century
National Bureau of Economic Research, 1991Co-Authors: Claudia Goldin, Robert A MargoAbstract:The Structure of Wages narrowed considerably during the 1940's, increased slightly during the 1950's and 1960's, and then expanded greatly after 1970. The era of Wage stretching of the past two decades has been a current focus, but we return attention here to the decade that was witness to an extraordinary compression in the Wage Structure. Wages narrowed by education, job experience, region, and occupation, and compression occurred within these cells as well. For white men, the 90-10 differential in the log of Wages was 1.414 in 1940 but 1.060 in 1950. By 1985 it has risen back to its 1940 level. Thus the recent widening of the Wage Structure has returned to it a dispersion characteristic of fifty years ago. We explore various explanations for the rapid compression in the Wage Structure during the 1940's and for its maintenance during the subsequent decade or more. We first assess the hypothesis that the Great Depression left the Wage Structure in 1939 more unequal than in the late 1920's, but we find evidence to the contrary. World War II and the National War Labor Board share some of the credit for the Great Compression. But much belongs to a rapid increase in the demand for unskilled labor at a time when educated labor was greatly increasing in number. These same factors caused the Wage Structure to remain compressed until its expansion during the past two decades.
David H Autor - One of the best experts on this subject based on the ideXlab platform.
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women war and Wages the effect of female labor supply on the Wage Structure at midcentury
Journal of Political Economy, 2004Co-Authors: Daron Acemoglu, David H Autor, David S LyleAbstract:We exploit the military mobilization for World War II to investigate the effects of female labor supply on the Wage Structure. The mobilization drew many women into the workforce permanently. But the impact was not uniform across states. In states with greater mobilization of men, women worked more after the war and in 1950, though not in 1940. These induced shifts in female labor supply lowered female and male Wages and increased earnings inequality between high school– and college‐educated men. It appears that at midcentury, women were closer substitutes for high school men than for those with lower skills.
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women war and Wages the effect of female labor supply on the Wage Structure at mid century
National Bureau of Economic Research, 2002Co-Authors: Daron Acemoglu, David H Autor, David S LyleAbstract:This paper investigates the effects of female labor supply on the Wage Structure. To identify variation in female labor supply, we exploit the military mobilization for World War II, which drew many women into the workforce as males exited civilian employment. The extent of mobilization was not uniform across states, however, with the fraction of eligible males serving ranging from 41 to 54 percent. We find that in states with greater mobilization of men, women worked substantially more after the War and in 1950, though not in 1940. We interpret these differentials as labor supply shifts induced by the War. We find that increases in female labor supply lower female Wages, lower male Wages, and increase the college and premium and male Wage inequality generally. Our findings indicate that at mid-century, women were closer substitutes to high school graduate and relatively low-skill males, but not to those with the lowest skills.
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changes in the Wage Structure and earnings inequality
Handbook of Labor Economics, 1999Co-Authors: Lawrence F Katz, David H AutorAbstract:This chapter presents a framework for understanding changes in the Wage Structure and overall earnings inequality. The framework emphasizes the role of supply and demand factors and the interaction of market forces and labor market institutions. Recent changes in the US Wage Structure are analyzed in detail to highlight crucial measurement issues that arise in studying Wage Structure changes and to illustrate the operation of the supply-demand-institution framework. The roles of skill-biased technological change, globalization forces, changes in demographics and relative skill supplies, industry labor rents, unions, and the minimum Wage in the evolution of the US Wage Structure are examined. Recent Wage Structure changes are placed in a longer-term historical perspective, and differences and similarities in Wage Structure changes among OECD nations are assessed.
David S Lyle - One of the best experts on this subject based on the ideXlab platform.
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women war and Wages the effect of female labor supply on the Wage Structure at midcentury
Journal of Political Economy, 2004Co-Authors: Daron Acemoglu, David H Autor, David S LyleAbstract:We exploit the military mobilization for World War II to investigate the effects of female labor supply on the Wage Structure. The mobilization drew many women into the workforce permanently. But the impact was not uniform across states. In states with greater mobilization of men, women worked more after the war and in 1950, though not in 1940. These induced shifts in female labor supply lowered female and male Wages and increased earnings inequality between high school– and college‐educated men. It appears that at midcentury, women were closer substitutes for high school men than for those with lower skills.
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women war and Wages the effect of female labor supply on the Wage Structure at mid century
National Bureau of Economic Research, 2002Co-Authors: Daron Acemoglu, David H Autor, David S LyleAbstract:This paper investigates the effects of female labor supply on the Wage Structure. To identify variation in female labor supply, we exploit the military mobilization for World War II, which drew many women into the workforce as males exited civilian employment. The extent of mobilization was not uniform across states, however, with the fraction of eligible males serving ranging from 41 to 54 percent. We find that in states with greater mobilization of men, women worked substantially more after the War and in 1950, though not in 1940. We interpret these differentials as labor supply shifts induced by the War. We find that increases in female labor supply lower female Wages, lower male Wages, and increase the college and premium and male Wage inequality generally. Our findings indicate that at mid-century, women were closer substitutes to high school graduate and relatively low-skill males, but not to those with the lowest skills.
Daron Acemoglu - One of the best experts on this subject based on the ideXlab platform.
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women war and Wages the effect of female labor supply on the Wage Structure at midcentury
Journal of Political Economy, 2004Co-Authors: Daron Acemoglu, David H Autor, David S LyleAbstract:We exploit the military mobilization for World War II to investigate the effects of female labor supply on the Wage Structure. The mobilization drew many women into the workforce permanently. But the impact was not uniform across states. In states with greater mobilization of men, women worked more after the war and in 1950, though not in 1940. These induced shifts in female labor supply lowered female and male Wages and increased earnings inequality between high school– and college‐educated men. It appears that at midcentury, women were closer substitutes for high school men than for those with lower skills.
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women war and Wages the effect of female labor supply on the Wage Structure at mid century
National Bureau of Economic Research, 2002Co-Authors: Daron Acemoglu, David H Autor, David S LyleAbstract:This paper investigates the effects of female labor supply on the Wage Structure. To identify variation in female labor supply, we exploit the military mobilization for World War II, which drew many women into the workforce as males exited civilian employment. The extent of mobilization was not uniform across states, however, with the fraction of eligible males serving ranging from 41 to 54 percent. We find that in states with greater mobilization of men, women worked substantially more after the War and in 1950, though not in 1940. We interpret these differentials as labor supply shifts induced by the War. We find that increases in female labor supply lower female Wages, lower male Wages, and increase the college and premium and male Wage inequality generally. Our findings indicate that at mid-century, women were closer substitutes to high school graduate and relatively low-skill males, but not to those with the lowest skills.
