Working Paper: NBER ID: w4297
Authors: Lawrence F. Katz; Gary W. Loveman; David O. Blanchflower
Abstract: This paper compares changes in the structure of wages in France, Great Britain, Japan. and the United States over the last twenty years. Wage differentials by education and occupation (skill differentials) narrowed substantially in all four countries in the 1970s. Overall wage inequality and skill differentials expanded dramatically in Great Britain and the United States and moderately in Japan during the 1980s. In contrast, wage inequality did not increase much in France through the mid-1980s. Industrial and occupational shifts favored more-educated workers in all four countries throughout the last twenty years. Reductions in the rate of the growth of the relative supply of college-educated workers in the face of persistent increases in the relative demand for more-skilled labor can explain a substantial portion of the increase in educational wage differentials in the United States, Britain, and Japan in the 1980s. Sharp increases in the national minimum wage (the SM1C) and the ability of French unions to extend contracts even in the face of declining membership helped prevent wage differentials from expanding in France through the mid-1980s.
Keywords: Wage Structure; OECD Countries; Wage Inequality; Labor Economics
JEL Codes: J31; J23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| reduction in growth of relative supply of college-educated workers (J24) | increase in educational wage differentials (J31) |
| increase in demand for skilled labor (J24) | increase in educational wage differentials (J31) |
| relative supply of highly educated workers (J24) | narrowing of skill differentials (J79) |
| deceleration in growth of relative supply of college-educated workers (J24) | expansion of wage differentials by education (J31) |
| national minimum wage and union contracts (J51) | mitigation of expansion of wage differentials (F66) |
| institutional frameworks in France (F55) | prevention of significant increases in wage inequality (F66) |