What's Driving Wage Inequality?

17 Pages Posted: 6 Dec 2012

See all articles by Aaron Steelman

Aaron Steelman

Federal Reserve Banks - Federal Reserve Bank of Richmond

John A. Weinberg

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: 2005

Abstract

Wage inequality has increased sharply in the United States since the mid-1970s. Some have argued that globalization — in particular, increased international trade and immigration — is primarily responsible for changes in the wage distribution. However, Senior Vice President and Director of Research, John Weinberg and Region Focus Editor, Aaron Steelman, argue that the main cause is skill-biased technical change. Workers with relatively high skill levels have experienced more rapid growth in wages than less-skilled workers, some of whom have seen an actual decline in their real wages. Although technical change likely has increased wage inequality, it also has greatly enhanced productivity and living standards in the United States. This article first appeared in the Bank's 2004 Annual Report.

Suggested Citation

Steelman, Aaron and Weinberg, John A., What's Driving Wage Inequality? (2005). FRB Richmond Economic Quarterly, vol. 91, no. 3, Summer 2005, pp. 1-17. Available at SSRN: https://ssrn.com/abstract=2185570

Aaron Steelman (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

John A. Weinberg

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States
804-697-8205 (Phone)
804-697-8255 (Fax)

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