Chinhui Juhn

Wage Inequality and the Rise in Returns to Skill

Using data from the March Current Population Survey, we document an increase over the past 30 years in wage inequality for males. Between 1963 and 1989, real average weekly wages for the least skilled workers (as measured by the tenth percentile of the wage distribution) declined by about 5 percent, whereas wages for the most skilled workers (as measured by the ninetieth percentile of the wage distribution) rose by about 40 percent. We find that the trend toward increased wage inequality is apparent within narrowly defined education and labor market experience groups. Our interpretation is that much of the increase in wage inequality for males over the last 20 years is due to increased returns to the components of skill other than years of schooling and years of labor market experience. Our primary explanation for the general rise in returns to skill is that the demand for skill rose in the United States over this period.

Decline of Male Labor Market Participation: The Role of Declining Market Opportunities

This paper uses micro data from the Current Population Surveys to document the secular decline in labor market activity among prime age men from 1967 to 1987. Declines in employment occur at all ages but are found to be particularly severe among less-educated and low-wage men. Information on the cross-section wage-employment relationship and on actual wage changes indicates that the initial fall in employment from the late 1960s to the early 1970s is entirely attributable to falling labor supply whereas since the early 1970s, wage changes predict most of the decline in employment for whites and approximately half of the decline for blacks.

Wage Inequality and Family Labor Supply

Using the March Current Population Surveys and the 1960 census, this article describes earnings and employment changes for married couples in different types of households stratified by the husbands hourly wage. While declines in male employment and earnings have been greatest for low-wage men, employment and earnings gains have been largest for wives of middle- and high-wage men. These findings cast doubt on the notion that married women have increased their labor supply in the recent decades to compensate for the disappointing earnings growth of their husbands.

Wage Inequality and Demand for Skill: Evidence from Five Decades

Using the 1940–90 Censuses, the author examines long-run changes in male wage inequality and skill premiums and investigates the extent to which shifts in observable measures of skill supply and demand can account for relative wage fluctuations across decades. A simple supply and demand framework is reasonably successful in accounting for movements in the education premium but is less successful in explaining changes in overall wage inequality. While the difference between the 90th and 10th percentiles of the log wage distribution fell sharply in the 1940s and grew at an accelerating rate in the 1980s, relative demand for the most versus the least skilled workers rose steadily throughout the period. The pace of industrial change and, in particular, the expansion of medium-skilled sectors such as blue-collar manufacturing appear to have been inversely related to overall wage inequality growth.

Did Trade Liberalization Help Women? The Case of México in the 1990s

With the signing of the North American Free Trade Agreement (NAFTA) in 1994, Mexico entered a bilateral free trade agreement which not only lowered its own tariffs on imports but also lowered tariffs on its exports to the U.S. We find that womens relative wage increased, particularly during the period of liberalization. Both between and within-industry shifts also favored female workers. With regards to between-industry shifts, tariff reductions expanded sectors which were initially female intensive. With regards to within-industry shifts, we find a positive association between reductions in export tariffs (U.S. tariffs on Mexican goods) and hiring of women in skilled blue-collar occupations. Finally, we find suggestive evidence that household bargaining power shifted in favor of women. Expenditures shifted from goods associated with male preference, such as mens clothing and tobacco and alcohol, to those associated with female preference such as womens clothing and education.

Labor Market Dropouts and Trends in the Wages of Black and White Men

There is continuing debate over whether and to what degree estimations of black-white wage convergence are biased because they leave labor market dropouts out of the picture. If a high proportion of blacks become discouraged and cease searching for jobs, and if those dropouts have, on average, poor job prospects, the average wage of black workers who remain in the labor market will be an upwardly biased estimate of the average wage across the population. This paper introduces a simple method of imputing wages to non-workers. When non-workers are accounted for in the calculations, real wage growth for prime age black men over the 1969–98 period is reduced approximately 40%, and black-white wage convergence is reduced by approximately one-third. The author finds that a source of bias as important as falling employment rates is the growing gap between wages of workers and potential wages of non-workers.

Is There Still an Added-Worker Effect?

Using matched March Current Population Surveys, we examine labor market transitions of husbands and wives. We find that the “added-worker effect”—the greater propensity of nonparticipating wives to enter the labor force when their husbands exit employment—is still important among a subset of couples, but that the overall value of marriage as a risk-sharing arrangement has diminished because of the greater positive co-movement of employment within couples. While positive assortative matching on education did increase over time, this shift in the composition of couple types alone cannot account for the increased positive correlation.>

Does Reducing College Costs Improve Educational Outcomes for Undocumented Immigrants? Evidence from State Laws Permitting Undocumented Immigrants to Pay In-state Tuition at State Colleges and Universities

Ten states, beginning with Texas and California in 2001, have passed laws permitting undocumented students to pay the in-state tuition rate - rather than the more expensive out-of-state tuition rate - at public universities and colleges. We exploit state-time variation in the passage of the laws to evaluate the effects of these laws on the educational outcomes of Hispanic childhood immigrants who are not U.S. citizens. Specifically, through the use of individual-level data from the 2001-2005 American Community Surveys supplemented by the 2000 U.S. Census, we estimate the effect of the laws on the probability of attending college for 18- to 24-year-olds who have a high school degree and the probability of dropping out of high school for 16- to 17-year-olds. We find some evidence suggestive of a positive effect of the laws on the college attendance of older Mexican men, although estimated effects of the laws in general are not significantly different from zero.

Technical Change and the Demand for Skills during the Second Industrial Revolution: Evidence from the Merchant Marine, 1891–1912

Using a large, individual-level wage data set, we examine the impact of a major technological innovationthe steam engineon the demand for skills in the merchant shipping industry. We find that the technical change created a new demand for engineers, a skilled occupation. It had a deskilling effect on production workmoderately skilled able-bodied seamen were replaced by unskilled engine room operatives. On the other hand, able-bodied seamen, carpenters, and mates employed on steam vessels earned a premium relative to their counterparts on sail vessels, and this appears partly related to skill.

Markov Switching in Disaggregate Unemployment Rates

We develop a dynamic factor model with Markov switching to examine secular and business cycle fluctuations in the U.S. unemployment rates. We extract the common dynamics amongst unemployment rates disaggregated for 7 age groups. The framework allows analysis of the contribution of demographic factors to secular changes in unemployment rates. In addition, it allows examination of the separate contribution of changes due to asymmetric business cycle fluctuations. We find strong evidence in favor of the common factor and of the switching between high and low unemployment rate regimes. We also find that demographic adjustments can account for a great deal of secular changes in the unemployment rates, particularly the abrupt increase in the 1970s and 1980s and the subsequent decrease in the last 18 years.