Changes in the Distribution of Wages, 1940-1950: The Public vs. The Private Sector

38 Pages Posted: 24 Jul 2000 Last revised: 24 Sep 2022

See all articles by Robert A. Margo

Robert A. Margo

Boston University - Department of Economics; National Bureau of Economic Research (NBER)

Aldrich Finegan

Vanderbilt University - College of Arts and Science - Department of Economics

Date Written: December 1995

Abstract

Between 1940 and 1950 wage differentials within and between labor market groups narrowed significantly - the so-called 'Great Compression'. This paper disaggregates the Great Compression into its public and private components. Wage compression in the public sector, along with a decline in the pay premia received by public sector workers, explains about 40 percent of aggregate wage compression in the 1940s. The experience of the 1940s stands in stark contrast with that of the past two decades, in which a rigid public sector wage structure has dampened increases in aggregate wage inequality.

Suggested Citation

Margo, Robert A. and Finegan, T. Aldrich, Changes in the Distribution of Wages, 1940-1950: The Public vs. The Private Sector (December 1995). NBER Working Paper No. w5389, Available at SSRN: https://ssrn.com/abstract=225450

Robert A. Margo (Contact Author)

Boston University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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T. Aldrich Finegan

Vanderbilt University - College of Arts and Science - Department of Economics ( email )

Box 1819 Station B
Nashville, TN 37235
United States
(615) 322-3445 (Phone)

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