TY  - JOUR
AU  - Bernard, Andrew B
AU  - Jensen, J. Bradford
TI  - Understanding Increasing and Decreasing Wage Inequality
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6571
PY  - 1998
Y2  - May 1998
DO  - 10.3386/w6571
UR  - http://www.nber.org/papers/w6571
L1  - http://www.nber.org/papers/w6571.pdf
N1  - Author contact info:
Andrew B. Bernard
Tuck School of Business at Dartmouth
100 Tuck Hall
Hanover, NH  03755
Tel: 603/646-0302
Fax: 603/646-0995
E-Mail: Andrew.B.Bernard@dartmouth.edu

J. Bradford Jensen
McDonough School of Business
Georgetown University
Washington, DC 20057
Tel: 202/687-3767
E-Mail: jbj24@georgetown.edu
M1  - published as Andrew B. Bernard, J. Bradford Jensen. "Understanding Increasing and Decreasing Wage Inequality," in Robert C. Feenstra, editor, "The Impact of International Trade on Wages" University of Chicago Press (2000)

AB  - This paper uses data on inequality within U.S. states to test hypotheses about the sources of rising wage inequality during the 1970s and 1980s.  State labor markets are found to respond to local demand shocks in the short and medium run and to national (industry) demand shocks only after long intervals.  The measure of wage inequality employed in the paper is the (log) ratio of the weekly wage at the 90th percentile to that at the 10th percentile in the state after controlling for observable characteristics of the workers.  Individual states are found to have very different levels and changes of inequality.  For example, Pennsylvania and Georgia had the second lowest and ninth highest 90-10 ratios respectively in 1970.  By 1990, Georgia's 90-10 ratio had fallen 4% while Pennsylvania's had risen 21%. This paper finds that changes in industrial composition, in particular the loss of durable manufacturing jobs, are strongly correlated with inequality increases.
ER  -