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October 1997, Vol. 120, No. 10
Marķa E. Enchautegui
One of the most dramatic economic changes of the last 20 years has been a stagnation of earnings. In this regard, low-skilled workers fared worse than any other group. The hourly wage gap between white high school dropouts and white college graduates went from 23 percent in 1980 to 36 percent in 1990.1 Among the factors that have been held responsible for the drastic deterioration in the relative wages of low-skilled workers are technological change and international trade.2 The wage trends in the 1980s are also characterized by a growing disparity by ethnicity, such as the growing wage gap between whites and African-American, and between Latinos and non-Latinos.3
During the period of decline in wages of low-skilled workers, immigration increased precipitously. The number of immigrants ages 18 to 55, not enrolled in school and with less than a high school diploma, increased from 2.8 million in 1980 to 4.5 million in 1990, leading some to suggest that immigration might be a factor behind the decline. Research on inequality shows that the largest increase in inequality took place in the West and that this differential can be attributed, in part, to the entrance of a large number of low-skilled immigrants into the labor force.4 Outside the West, the large drop in low-skilled labor supply partially offset the decline in wages resulting from structural change.5 One source attributes 40 percent of the decline in the wages of low-skilled natives to immigration and trade combined.6
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1 McKinley L. Blackburn, David E. Bloom, and Richard B. Freeman, "The Declining Economic Position of Less Skilled American Men," in Gary Burtless, ed., A Future of Lousy Jobs? The Changing Structure of U.S. Wages (Washington, DC, Brookings Institution Press, 1990), pp. 31-76.
2 Burtless, A Future of Lousy Jobs? See also Marvin Koster, Workers and Their Wages (Washington, DC, American Enterprise Institute Press, 1991).
3 See Chinhui Juhn, Kelvin Murphy, and Brooks Pierce, "Accounting for the Slowdown in Black-White Wage Convergence," in Koster, Workers and Their Wages, pp. 107-43; Cordelia Reimers, Caught in the Widening Skill Differential: Native-born Mexican American Wages in California in the 1980s, manuscript (New York, Hunter College, Department of Economics, 1994); and Stephen J. Trejo, Why Do Mexicans Earn Low Wages?, manuscript (Santa Barbara, CA, University of Santa Barbara, 1995).
4 Robert H. Topel, "Regional Labor Markets and the Determinants of Wage Inequality," American Economic Review: Papers and Proceedings, May 1994, pp. 17-22.
6George J. Borjas, Lawrence F. Katz, and Richard B. Freeman, On the Labor Market Effects of Immigration and Trade, working paper (Washington, DC, National Bureau of Economic Research, 1991).
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