Working Paper: NBER ID: w13523
Authors: Thomas Lemieux
Abstract: The paper reviews recent developments in the literature on wage inequality, with a particular focus on why inequality growth has been particularly concentrated in the top end of the wage distribution over the last 15 years. Several possible institutional and demand-side explanations are discussed for the secular growth in wage inequality in the United States and other advanced industrialized countries. The paper concludes that three promising explanations for the growth in top-end wage inequality are de-unionization, the increased prevalence of pay for performance, and changes in the relative demand for the types of tasks performed by workers in high-paying occupations.
Keywords: Wage Inequality; Deunionization; Performance Pay
JEL Codes: J24; J31; J51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| deunionization (J51) | increase in top-end wage inequality (J31) |
| increased prevalence of performance pay (J33) | increase in wage inequality (J31) |
| decline in the real value of the minimum wage (J38) | increase in low-end wage inequality (F66) |
| deunionization (J51) | increase in wage inequality (J31) |
| institutional factors (D02) | increase in low-end wage inequality (F66) |