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The Structure of Wages

The Structure of Wages Abstract Although surveys show that traditional orderings of average wage—i.e., higher earnings with higher schooling and concave age-wage profiles—have not changed during the past three decades, the actual size of the wage differentials measured by education or by work experience has varied from peak to trough by a factor of two-to-one. The patterns are not monotone, but there is a trend toward increased skill premiums. We first examine the structure of wages among white men distinguished by age and schooling for the period from 1963 to 1989. We then compare shifts in the distribution of wages and employment among the age x schooling categories to show in reference to a stable demand structure that employment alone cannot account for observed changes in relative wages. Finally, we describe the characteristics required of candidate demand shifters and offer examples using linear trend, business cycle shocks, and recent patterns of deficits in international trade. * Financial support from the U. S. Department of Health and Human Services, National Institute of Child Health and Human Development (Grant #R01 HD2171303A2), and the National Science Foundation (Grant #SES-9012584) is gratefully acknowledged. This is a revision and update of an unpublished earlier version under the same title that used data through 1985. This version adds four years, through 1989. Most of what is here is similar to the earlier version. Modifications reflect excellent comments received and the maturation of our thinking as our research in this area has continued. The opinions expressed are our own and do not necessarily reflect the policies or opinions of either of the sponsoring agencies. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College and The Massachusetts Institute of Technology http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Quarterly Journal of Economics Oxford University Press

The Structure of Wages

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Publisher
Oxford University Press
Copyright
© 1992 by the President and Fellows of Harvard College and The Massachusetts Institute of Technology
ISSN
0033-5533
eISSN
1531-4650
DOI
10.2307/2118330
Publisher site
See Article on Publisher Site

Abstract

Abstract Although surveys show that traditional orderings of average wage—i.e., higher earnings with higher schooling and concave age-wage profiles—have not changed during the past three decades, the actual size of the wage differentials measured by education or by work experience has varied from peak to trough by a factor of two-to-one. The patterns are not monotone, but there is a trend toward increased skill premiums. We first examine the structure of wages among white men distinguished by age and schooling for the period from 1963 to 1989. We then compare shifts in the distribution of wages and employment among the age x schooling categories to show in reference to a stable demand structure that employment alone cannot account for observed changes in relative wages. Finally, we describe the characteristics required of candidate demand shifters and offer examples using linear trend, business cycle shocks, and recent patterns of deficits in international trade. * Financial support from the U. S. Department of Health and Human Services, National Institute of Child Health and Human Development (Grant #R01 HD2171303A2), and the National Science Foundation (Grant #SES-9012584) is gratefully acknowledged. This is a revision and update of an unpublished earlier version under the same title that used data through 1985. This version adds four years, through 1989. Most of what is here is similar to the earlier version. Modifications reflect excellent comments received and the maturation of our thinking as our research in this area has continued. The opinions expressed are our own and do not necessarily reflect the policies or opinions of either of the sponsoring agencies. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College and The Massachusetts Institute of Technology

Journal

The Quarterly Journal of Economics – Oxford University Press

Published: Feb 1, 1992

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