Wage Dispersion in the 1980s: Resurrecting the Role of Trade Through the Effects of Durable Employment Changes

36 Pages Posted: 15 Feb 2006

See all articles by Elaine Buckberg

Elaine Buckberg

NERA Economic Consulting

Alun H. Thomas

International Monetary Fund (IMF) - European Department

Date Written: August 1995

Abstract

This paper finds that changes in durable manufacturing employment and investment in computer equipment can explain rising wage dispersion in the United States, measured in terms of the education premium. Reduced employment opportunities in durables production drive down the average wage for workers with only a high school education, thereby increasing the wage premium for college education. An innovation in this paper is the inclusion of investment in equipment as a proxy for skill-biased technical change. The rise in the technical skill premium could alone explain all of the rise in the college premium since 1979 were there no offsetting effects.

JEL Classification: J30, J31

Suggested Citation

Buckberg, Elaine and Thomas, Alun, Wage Dispersion in the 1980s: Resurrecting the Role of Trade Through the Effects of Durable Employment Changes (August 1995). IMF Working Paper No. 95/88, Available at SSRN: https://ssrn.com/abstract=883235

Elaine Buckberg (Contact Author)

NERA Economic Consulting ( email )

1166 Avenue of the Americas, 29th Floor
New York, NY 10036
United States

Alun Thomas

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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