Inequality in American Manufacturing Wages, 1920-1998: A Revised Estimate
UTIP Working Paper No. 8
14 Pages Posted: 25 Feb 2001
Date Written: February 1999
In recent work one of us has presented measurements of the evolution of inequality in the U.S. manufacturing sector, from 1920 to 1992. This paper updates and revises those estimates, using a monthly data set for wages and employment of production workers in 18 sectors, for which continuous data are available back to January, 1947. The main findings of the previous study are confirmed: there is a close connection between the dispersion of hourly wage rates and unemployment. But the previous series erred in bridging a gap in the data between 1947 and 1958 by assuming that inequality in manufacturing in that period tracked the movement of a Gini coefficient for household incomes, which was fairly stable during this time. In fact, in the 1950s manufacturing wage rate inequality rose sharply, reaching the extreme levels of the 1930s. An implication is that inequality in manufacturing hourly wage rates in the late 1970s and 1980s, previously thought to be lower than during the Great Depression, was in fact much higher. The new series also shows that wage rate inequality began declining again in 1994, and has now fallen to just below the peaks of the inter-war period. The data are current to the end of 1998.
JEL Classification: J31
Suggested Citation: Suggested Citation