Trends In Wage Inequality Research Articles

Cross‐country Inequality Trends

I review the two most popular explanations for the differential trends in wage inequality in US/UK and Europe: that relative supply of skills increased faster in Europe, and that European labour market institutions prevented inequality from increasing. Although these explanations go some way towards accounting for the differential cross-country inequality trends, it also appears that relative demand for skills increased differentially across countries. I develop a simple theory where labour market institutions creating wage compression in Europe also encourage more investment in technologies increasing the productivity of less-skilled workers, implying less skill-biased technical change in Europe than the US.

A Production Theory Approach to the Imports and Wage Inequality Nexus

I employ a production theory approach to investigate the effect of fluctuations in the prices of imports of different origin on the wage differential between skilled and unskilled labor in the United States. Unlike competing methodologies, the employed framework of analysis accounts for the economy‐wide effects of imports that derive from both domestic output substitution as well as downstream production. The results of this study suggest that the overall impact of imports, including those that originate in less developed economies, on the wage differential is negligible. Economy‐wide dynamic processes of capital accumulation and technical change appear to play a far more important role in wage dispersion.

Post-Reform Trends in Wage Inequality: The Case of Urban Bolivia

Summary: This paper seeks to contribute to the ongoing controversy on the distributional effects of structural reforms in developing countries. Applying inequality indices and Fields' (2001) decomposition methodology to Bolivian household survey data of the years 1989 to 1997, we identify recent trends in wage inequality of urban Bolivia. Using a rent-based dual-economy model, we can link these trends to the structural reforms undertaken in Bolivia since 1985.

Defusing the baby boomer time bomb: projections of after-tax income in the twenty-first century.

There has been a major national policy debate over the prospective tax burden facing future generations of workers as a result of the impending retirement of the baby boom generation. However, the real determinant of well-being is after-tax income, not the tax rate on before-tax income. This study constructs a series of projections of after-tax income, for workers and families at different points in the income distribution, to examine the effects of several different trends. The author first calculates the extent to which after-tax income can be expected to decline as the result of the aging of the baby boomers, then calculates the impact on after-tax income for families at different points in the income distribution of a continuation of recent trends in wage inequality. He also constructs a category of "after-tax, after-health-care spending" income, which examines the impact of the continued rapid growth in health care costs. The findings suggest that the continuation of recent trends in inequality and health care cost growth will have a much larger effect on future living standards than will the aging of the baby boomers.

Covariance Models For Latent Structure In Longitudinal Data

We present several approaches to modeling latent structure in longitudinal studies when the covariance itself is the primary focus of the analysis. This is a departure from much of the work on longitudinal data analysis, in which attention is focused solely on the cross-sectional mean and the influence of covariates on the mean. Such analyses are particularly important in policy-related studies, in which the heterogeneity of the population is of interest. We describe several traditional approaches to this modeling and introduce a flexible, parsimonious class of covariance models appropriate to such analyses. This class, while rooted in the tradition of mixed effects and random coefficient models, merges several disparate modeling philosophies into what we view as a hybrid approach to longitudinal data modeling. We discuss the implications of this approach and its alternatives especially on model interpretation. We compare several implementations of this class to more commonly employed mixed effects models to describe the strengths and limitations of each. These alternatives are compared in an application to long-term trends in wage inequality for young workers. The findings provide additional guidance for the model formulation process in both statistical and substantive senses.

U.S. Wage-Inequality Trends and Recent Immigration

How should we assess the changing economic status of workers and families in the United States? The answer is obvious to many, including outstanding economists who decry the meager wage growth and rising wage and income inequality in the United States since 1979 (Paul Krugman, 1992; Richard Freeman, 1996/1997; James Tobin, 1996/1997 ) . According to Freeman (1996/1997) the following ‘‘facts are not in dispute’’:

Changes in the Distribution of Wages in Canada, 1981-1992

This article uses microdata to study the changes in the distribution of weekly wages in Canada from 1981 to 1992. Changes in the distribution are analyzed using Lorenz curves and eight different univariate measures of inequality. Evidence is presented that indicates that inequality is anticyclical, increasing during recessions and falling during business cycle expansions. Moreover, after changes in the cycle are accounted for, there has been a clear upward trend in wage inequality. Comparisons between the Canadian and the U.S. distributions show that wage inequality was less pronounced in Canada than it was in the United States in the 1980s and was increasing in Canada relative to the United States from 1989 to 1992.

Foreign Competition, Market Power, and Wage Inequality

This paper investigates the link between the trend in the returns to education and foreign competition in concentrated industries. We argue that the impact of foreign competition on the relative wages of less skilled workers depends on the market structure of the industry penetrated. The empirical evidence indicates that employment changes in a small group of trade-impacted concentrated industries can explain not only part of the aggregate rise in wage inequality in the United States, but also some of the differences in the trends in wage inequality across metropolitan areas.