IN FOCUS I. WAGES: A DECADE OF TRANSFORMATION (original) (raw)

Wages, Profits, and Macroeconomic Adjustment: A Comparative Study

Brookings Papers on Economic Activity, 1979

THE BEHAVIOR of real wages has complicated macroeconomic policy in the industrialized world during the 1970s. Many commentators have discussed the extraordinary increase in wage inflation in Europe and Japan at the end of the last decade.1 Few have noted that the nominal wage gains resulted in remarkable increases in real wages. The five large economies outside North America in the Organisation for Economic Cooperation and Development (OECD) had rapid growth of real hourly compensation in 1969-73, along with high rates of increase of nominal compensation. In most large OECD economies, real wages in the late 1960s grew faster than productivity, so that the distribution of income shifted toward labor, while the rate of return on capital was substantially reduced. 1. For a thorough econometric study, see George L. Perry, "Determinants of Wage Inflation around the World," BPEA, 2:1975, pp. 403-35. Another important study that focuses largely on the 1969-76 period is Robert J. Gordon, "World Inflation and Monetary Accommodation in Eight Countries," BPEA, 2:1977, pp. 409-68. Further evidence for extraordinary wage behavior in the late 1960s is provided by Erich Spitaller, "Semi-Annual Wage Equations for the Manufacturing Sectors in Six Major Industrial Countries," Weltwirtschaftliches Archiv, vol. 112, no. 2 (1976), pp. 300-37. In addition, from a vast sociological literature that focuses on wages and trade union behavior in the late 1960s, see the collections of essays in

A Comparison of Changes in the Structure of Wages

1993

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 mom-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, arid Japan in the 1980s. Sharp increases in the national minimum wage (the SMIC) 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.

Differences and changes in wage structures

2007

Earnings inequality increased substantially in the United States in the 1980s, and the real earnings of many groups of workers, primarily men, fell from the early 1970s through the early 1990s. In 1993, about 16 percent of the nation's year-round, full-time workers were labeled as low-wage workers by the U.S. Department of Commerce, earning less than the poverty level for a family of four ($13,483 per year in 1993 dollars)-an increase of approximately 33 percent over the 12 percent who had low earnings in 1979. Less educated young men suffered unprecedented losses in real earnings. Despite their costing employers less, however, these men were less likely to work at any point in time than in the past. In short, in the 1980s, if not earlier, the U.S. labor market experienced a massive twist against the less skilled and lower paid that reduced their living standards.

Changes in Relative Wages, 1963-1987: Supply and Demand Factors

1991

A simple supply and demand framework is used to analyze changes in the U.S. wage structure from 1963 to 1987. Rapid secular growth in the demand for more-educated workers1 more-skilled' workers, and females appears to be the driving force behind observed changes in the wage structure. Measured changes in the allocation of labor between industries and occupations strongly favored college graduates and females throughout the period. Movements in the college wage premium over this period appear to be strongly related to fluctuations in the rate of growth of the supply of college graduates.

Disaggregated Wage Developments

Brookings Papers on Economic Activity, 1988

Disaggregated Wage Developments UNEMPLOYMENT has declined substantially in the United States in recent years, from 9.6 percent of the civilian labor force in 1983 to 5.7 percent in the first quarter of 1988, while wage and price inflation have remained low. Annual increases in the private nonfarm average hourly earnings index, for example, ranged from 2.0 percent to 3.8 percent and averaged 3.0 percent between 1983 and 1987. During the first three months of 1988 average hourly earnings increased at an annual rate of 2.5 percent. This report examines nominal wage growth during the 1980s. It first documents the slowdown in wage inflation and then examines possible sources of that slowdown.