Journal Article

The effects of industry employment shifts on U.S. wage structure, 1979-1995

Abstract: The trend toward increasing U.S. wage inequality during the 1980s is well documented. I investigate the role of employment shifts from goods-producing to service-producing industries in contributing to increased inequality during the period 1979-1995. Earlier analyses revealed that average earnings are lower, and earnings inequality is higher, for service-producing workers than for goods-producing workers. For both reasons, and increasing share of service employment may increase earnings inequality. I analyses the effect of broad industry employment shifts by using a recently developed statistical technique, which I term \"conditionally weighted density estimation.\" This technique enables investigation of the effects of changing industry employment shares on the complete distribution of earnings, conditional on changes in other earnings-related characteristics. The results show at most a small effect of industry employment shifts on growing inequality in male hourly earnings.

Keywords: Labor market; Income distribution; Wages; Service industries;

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Bibliographic Information

Provider: Federal Reserve Bank of San Francisco

Part of Series: Economic Review

Publication Date: 1997

Pages: 16-32

Order Number: 1