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July 1994, Vol. 117, No. 7
Gender-related shifts in the distribution of wages
In recent years, U.S. wage earners have faced a variety of changes in the labor market. For example, computers and other information technologies have redefined the nature of many jobs, corporate downsizings and layoffs have altered the career paths of numerous workers, and stiffer global and domestic competition has sharpened concerns over labor costs on the part of employers. These developments and others have produced changes in the shape of the wage distribution and, for many wage earners, their location in it.
It is common knowledge today that the Nation's wage structure became more dispersed and unequal in the 1980's.1 Not only did the gap between low-wage workers and high-wage workers widen, but the percentage of workers in the middle of the distribution thinned out, resulting in larger percentages of workers at the bottom and top. Researchers on growing wage inequality, which Frank Levy and Richard J. Murnane recently reviewed, has been voluminous.2
The cause of growing wage inequality in the 1980's, however, continues to be the subject of much research, and various explanations have been proposed. A leading candidate has been a shift in the demand for labor in favor of highly skilled and educated workers within industries. Two pairs of researchersóLawrence F. Kats and Kevin M. Murphy, and John Bound and George Johnsonóhave associated these shifts with skill-biased technological change, or changes in technology that require well-trained workers.3 The corollary to such shifts, or course, is the collapsing demand for unskilled workers during the 1980's.4
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1 It is not as well known, however, that wage inequality was on the rise (especially among men) before the 1980's. See, for example, Peter Henle and Paul Ryscavage, "The distribution of earned income among men and women," Monthly Labor Review, April 1980, pp. 3-10.
2 See Frank Levy and Richard J. Murnane, "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, September 1992, pp. 1333-81.
3 See Lawrence F. Katz and Kevin M. Murphy, "Changes in Relative Wages, 1963-1987: Supply and Demand Factors," Quarterly Journal of Economics, Vol. CVII, No. 1, February 1992, pp. 35-78; and John Bound and George Johnson, "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations," American Economic Review, Vol. 82, No. 3, June 1992, pp. 371-92. See also Maury Gittleman, "Earnings in the 1980's: and occupational perspective," this issue, pp. 16-27.
4 A major consequence of these wage shifts has been growing inequality in the distribution of incomes among families and households, for whom success or failure in a job market is usually the most important determination of economic well-being.
Another contributing factor to rising income inequality among families and households mentioned in the literature has been changes in family composition, especially a shift from married-couple to single-parent families. (See, for example, Lynn Karoly, "The trend in Inequality among families, individuals, and Workers in the United States: A twenty-Five Year Perspective," in Sheldon Danziger and Peter Gottschalk, eds.,Uneven Tides: Rising Inequality in the 1980s (New York, Russell Sage Foundation, 1993); and Paul Ryscavage, Gordon Green, and Edward Welnick, "The Impact of Demographic, Social, and Economic Change on the Distribution of Income," in Studies in the Distribution of Income, Current Populations Reports, Consumer Income, P60-183 (Washington, DC, Bureau of the Census, October, 1992).
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