Rising Wage Inequality

The 1980s Experience in Urban Labor Markets

(The first chapter of this book is available in .pdf format.)

The major merit of this book lies in the author's disaggregative approach, his careful construction of explanatory variables (e.g., his use of real, rather than nominal, wage rates), and his exploration of a variety of nonwage benefits and the payoffs to a variety of skill measures. Although his result showing parallelism between local and national labor markets may relieve the conscience of those focusing on the national level, such a cross-sectional approach allows exploration of a number of different causal variables than in other labor market studies." Southern Economic Journal

This source also allows him to examine changes in the structure of wages paid for some 40 different jobs found in four different occupational groups. In addition, Hyclak is able to concentrate on jobs and the skills required as the primary determinant of wages, an approach, he says, that complements the more traditional human capital wage model that emphasizes the personal characteristics of workers.

Hyclak presents five notable empirical findings resulting from his work. They are

1. Both widening wage differentials among occupational groups and an increase in the degree of wage dispersion within occupations contributed to sharply increased wage inequality.
2. Widening wage inequality was accompanied by a decrease in the percentage of workers -- particularly those in blue-collar jobs -- who received employer-paid fringe benefits, which in turn is linked to a decrease in the percentage of workers covered by collective bargaining agreements.

3. There is evidence that skill-biased technological change contributed to rising wage inequality.
4. Various market and institutional changes contributed to rising wage inequality. These included rising unemployment rates, widening unemployment differentials across occupations, falling real and relative minimum wage rates, and declining collective bargaining coverage.
5. There is evidence that growing wage inequality set in motion adjustments in labor supply and demand that partially offset the initial change in inequality.

159 pp. 2000
$40 cloth ISBN 0-88099-208-5 / ISBN-13 978-0-88099-208-4
$14 paper ISBN 0-88099-207-7 / ISBN-13 978-0-88099-207-7.

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