Changes in Earnings Differentials in the 1980s: Concordance, Convergence, Causes, and Consequences

50 Pages Posted: 30 Aug 2000 Last revised: 31 Aug 2022

See all articles by McKinley L. Blackburn

McKinley L. Blackburn

University of South Carolina - Darla Moore School of Business

David E. Bloom

Harvard University - T.H. Chan School of Public Health; National Bureau of Economic Research (NBER)

Richard B. Freeman

National Bureau of Economic Research (NBER); University of Edinburgh - School of Social and Political Studies; Harvard University; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Date Written: November 1991

Abstract

This paper analyzes changes in U.S. earnings differentials in the 1980s between race, gender, age, and schooling groups. There are four main sets of results to report. First, the economic position of less-educated workers declined relative to the more-educated among almost all demographic groups. Education-earnings differentials clearly rose for whites, but less clearly for blacks, while employment rate differences associated with education increased more for blacks than for whites. Second, much of the change in education-earnings differentials for specific groups is attributable to measurable economic factors: to changes in the occupational or industrial structure of employment; to changes in average wages within industries; to the fall in the real value of the minimum wage and the tall in union density; and to changes in the relative growth rate of more-educated workers. Third, the earnings and employment position of white females, and to a lesser extent of black females, converged to that of white males in the 1980s, across education groups. At the same time, the economic position of more-educated black males appears to have worsened relative to their white-male counterparts. Fourth, there has been a sizable college-enrollment response to the rising relative wages of college graduates. This response suggests that education-earnings differentials may stop increasing, or even start to decline, in the near future.

Suggested Citation

Blackburn, McKinley L. and Bloom, David E. and Freeman, Richard B., Changes in Earnings Differentials in the 1980s: Concordance, Convergence, Causes, and Consequences (November 1991). NBER Working Paper No. w3901, Available at SSRN: https://ssrn.com/abstract=228000

McKinley L. Blackburn (Contact Author)

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Richard B. Freeman

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