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December 1997, Vol. 120,
No. 12
Robert I. Lerman
Rising earnings inequality in the United States is conventional wisdom among economists, policy elites, and journalists. Over the past several years, an extensive literature has emerged that documents increases in earnings inequality and attempts to provide explanations of the phenomenon.1 Richard Freeman has argued that "Researchers using several data sources—including household survey data from the Current Population Survey, other household surveys, and establishment surveys—have documents that wage inequality and skill differentials in earnings and employment increased sharply in the United States from the mid-1970s through the 1980s and into the 1990s."2
Recent publications reinforce the consensus that earnings inequality is continuing to increase. The 1997 Economic Report of the President points to growing inequality in annual earnings in trends among all male full-time, year-round workers, in the earnings ratios of college graduates to high school graduates, in the wage advantage of older to younger workers, and in the 90-50 and 50-10 cutoff ratios within groups classified by education (male high school graduates) and age (25- to 34-year-old men).3 This past spring, the Journal of Economic Perspectives published a symposium of four articles: all cite a growth in earnings inequality over various periods, including the late 1980s and early 1990s.4
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Footnotes
1 See, for example, Frank Levy and Richard Murnane,
"U.S. Earnings Levels and Earnings Inequality: A Review of
Recent Trends and Proposed Explanations," Journal of
Economic Literature, September 1992, pp. 1333-81; Chinhui
Juhn, Kevin Murphy, and Brooks Pierce, "Wage Inequality and
the rise in returns to skill," Journal of Political
Economy, June 1993, pp. 410-42; and Lawrence Katz and Kevin
Murphy, "Changes in Relative Wages, 1963-87: Supply and
Demand Factors," Quarterly Journal of Economics,
February 1992, pp. 35-78. More recently, Katherine Bradbury,
"The Growing Inequality of Family Incomes: Changing Families
and Changing Wages," New England Economic Review,
pp. 55-82, has found continuing increases in earnings inequality
through the 1980s and on into the early 1990s.
2 Richard Freeman, "Are your wages set in Beijing?" Journal of Economic Perspectives, Summer 1995, pp. 15-32.
3 Economic Report of the President: 1997 (Washington, DC, U.S. Government Printing Office, 1997).
4 See the following articles from the spring 1997 issue of Journal of Economic Perspectives: Peter Gottschalk, "Inequality, Income Growth, and Mobility," pp. 21-40; George Johnson, "Changes in Earnings Inequality: The Role of Demand Shifts," pp. 41-54; Robert Topel, "Factor Proportions and Relative Wages: The Supply-Side Determinants of Wage Inequality," pp. 55-74; and Nicole Fortin and Thomas Lemieux, "Institutional Changes and Rising Wage Inequality: Is There a Linkage?" pp. 75-96.
Related BLS programs
Labor Force
Statistics from the Current Population Survey
Related Monthly
Labor Review articles
Has wage inequality stopped growing? December
1997.
Earnings mobility in the United States, 1967-91. September 1995.
A surge in growing income inequality? August 1995.
Gender-related shifts in the distribution of wages. July 1994.
Trends in wage and salary inequality, 1967-88. June 1992.
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