Jennifer Hunt, Rutgers University

Why Are Fewer Workers Earnings Middle Wages and Is it a Bad Thing?
Wednesday, 14 March 2018 - 2:30 pm to 4:00 pm
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Contact person: 
Myra Yazbeck
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Free of charge
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Sponsored by "Canada and World Economy" series


We re-examine changes in U.S. employment by skill, departing from most previous literature by equating skill with wage rather than occupation. By assigning workers to real hourly wage bins with time-invariant thresholds and tracking over time the shares of workers in each, we  find a steady decline since 1979 in the share of both men and women earning middle wages, consistent with occupation{based analysis. However, we  and that both over the business cycle and the longer run, the shares of workers in the top and bottom bins move in opposite directions. This is inconsistent with the employment polarization found in occupation{based analysis, suggesting that labor market developments are not fully explained by computerization and automation displacing workers from middle{pay to low{pay occupations. The decline in the middle share has been a good thing for women throughout and to a lesser extent for men since 1992, representing mobility to higher wage bins, while it was a bad development for men in the 1980s, representing mobility to lower wage bins. We do not  find clear evidence that of labor market weakening for young college graduates since 2000, casting doubt on the hypothesis that demand for skilled workers has fallen as the computer revolution has matured.