Working Paper: NBER ID: w3021
Authors: Lawrence F. Katz; Ana L. Revenga
Abstract: This paper examines changes in wage differentials by educational attainment and experience in the US. and Japan since the early 1970s. While educational earnings differentials have expanded dramatically in the U.S. in the 1980s, the college wage premium has increased only slightly in Japan. In contrast to the large expansion in experience differentials for high school males in the U.S., the wages of male new entrants have risen relative to more experienced workers for both high school and college graduates in Japan from 1979 to 1987. Macroeconomic factors (increased openness, trade deficits, and labor market slack) and changes in institutional structures (the decline in unionization) are likely to have amplified each other in contributing to an unprecedented decline in real and relative earnings of young less-skilled - males in the U.S. in the 1980s. We further find that a sharp deceleration in the rate of growth of college graduates as a fraction of the labor force in the U.S. helps account for the much larger increase in the college wage premium in the U.S. than in Japan in the 1980s.
Keywords: wage differentials; educational attainment; experience; US; Japan
JEL Codes: J31; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Macroeconomic Factors (increased openness, trade deficits, labor market slack) (F41) | Decline in real and relative earnings of young less-skilled males (F66) |
| Decline in unionization (J50) | Decline in real and relative earnings of young less-skilled males (F66) |
| Sharp deceleration in growth of college graduates as a fraction of the labor force (J19) | Increase in college wage premium (J39) |