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June 2009, Vol. 132, No. 6
What do OES data have to say about increasing wage inequality?
John I. Jones
Most economists concur that wage inequality has been increasing in the United States since the 1970s.1 However, not all economists agree on the reasons behind this trend.2 One of the more widely held positions hypothesizes that increasing wage dispersion has been driven by skill-biased technical change benefiting those who possess greater technical skills. Specifically, advancements in technology have boosted the productivity and wages of skilled labor relative to that of unskilled labor.3 This article uses Occupational Employment Statistics (OES) survey data to explore wage inequality, measure changes in wage dispersion over time, and examine wage growth by occupational group, wage rate, skill level, and ties to technology.
The article first tests whether OES survey wage data support the notion that wage dispersion increased between 2002 and 2008. Then, occupational data are used to determine (1) whether wages for higher skilled occupations increased by more than wages for lower skilled occupations, (2) if so, which occupational groups were exceptions, and (3) whether occupations with the highest wage growth were most closely associated with technological innovation. Educational attainment data from the Current Population Survey are used as a proxy for determining which workers in an occupation are “more skilled” and which are “less skilled.”4
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1 Aaron Steelman and John A. Weinberg, “What’s Driving Wage Inequality?” Economic Quarterly (Federal Reserve Bank of Richmond), summer 2005, pp. 1–17, cite this general consensus among economists.
2 David H. Autor, Lawrence F. Katz, and Melissa S. Kearney, “The Polarization of the U.S. Labor Market,” NBER Working Paper No. 11986 (National Bureau of Economic Research, January 2006), pp. 1–19ff.
3 Steelman and Weinberg, “What’s Driving Wage Inequality?”
4 See “Occupational Projections and Training Data” (Bureau of Labor Statistics, no date), on the Internet at www.bls.gov/emp/optd (visited June 17, 2009). Data on educational attainment by occupation come from the Current Population Survey and are given in Occupational Projections and Training Data, Bulletin 2602 (Bureau of Labor Statistics, December 2007). Chapter 1, “Education and Training Classification Systems,” says,
The educational attainment cluster system sorts occupations according to the highest level of educational attainment of current workers....
If an education level represents the highest educational attainment of at least 20 percent of workers in an occupation, that education level is included in the education category of the occupation. For example, if more than 60 percent of workers have a high school diploma or less, less than 20 percent have some college or an associate degree, and less than 20 percent have a bachelor’s or higher degree, that occupation is considered a high school (HS) occupation. However, if more than 20 percent have a high school degree or less, more than 20 percent have attended some college or held an associate degree, and less than 20 percent have a bachelor’s or higher degree, the occupation is considered to be a high school/some college (HS/SC) occupation.
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