Trends in U.S. Wage Inequality: Re-Assessing the Revisionists

David Autor, Lawrence Katz and Melissa Kearney

No 11627, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A recent "revisionist " literature characterizes the pronounced rise in U.S. wage inequality since 1980 as an "episodic " event of the first-half of the 1980s driven by non-market factors (particularly a falling real minimum wage) and concludes that continued increases in wage inequality since the late 1980s substantially reflect the mechanical confounding effects of changes in labor force composition. Analyzing data from the Current Population Survey for 1963 to 2005, we find limited support for these claims. The slowing of the growth of overall wage inequality in the 1990s hides a divergence in the paths of upper-tail (90/50) inequality -- which has increased steadily since 1980, even adjusting for changes in labor force composition -- and lower tail (50/10) inequality, which rose sharply in the first-half of the 1980s and plateaued or contracted thereafter. Fluctuations in the real minimum wage are not a plausible explanation for these trends since the bulk of inequality growth occurs above the median of the wage distribution. Models emphasizing rapid secular growth in the relative demand for skills -- attributable to skill-biased technical change -- and a sharp deceleration in the relative supply of college workers in the 1980s do an excellent job of capturing the evolution of the college/high-school wage premium over four decades. But these models also imply a puzzling deceleration in relative demand growth for college workers in the early 1990s, also visible in a recent "polarization" of skill demands in which employment has expanded in high-wage and low-wage work at the expense of middle-wage jobs. These patterns are potentially reconciled by a modified version of the skill-biased technical change hypothesis that emphasizes the role of information technology in complementing abstract (high-education) tasks and substituting for routine (middle-education) tasks.

JEL-codes: D3 J3 O3 (search for similar items in EconPapers)
Date: 2005-09
New Economics Papers: this item is included in nep-edu, nep-lab and nep-ltv
Note: ED EFG LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (118)

Published as Autor, David H., Lawrence F. Katz and Melissa Schettini Kearney. “Trends in U.S. Wage Inequality: Re-Assessing the Revisionists.” Review of Economics and Statistics 90, 2 (May 2008) 300 – 323.

Downloads: (external link)
http://www.nber.org/papers/w11627.pdf (application/pdf)

Related works:
Working Paper: Trends in U. S. Wage Inequality: Re-Assessing the Revisionists (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:11627

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w11627

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().