Using regional data to reexamine the contribution of demographic and sectoral changes to increasing U.S. wage inequality

by Lynn A. Karoly, Jacob Alex Klerman


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This paper uses geographical disaggregation to reevaluate the importance of sectoral and demographic shifts in explaining recent changes in the U.S. wage distribution. Using hourly earnings data from the Current Population Survey, the authors explore two approaches to assessing the contribution of demographic and sectoral changes to the increase in inequality in that distribution. The first approach uses fine disaggregations of the sample of workers by age and industry to conduct shift-share analyses. The second approach conducts regression analyses of the trend in inequality for the panel sample of geographic areas as a function of aggregate measures of demographic, industry, macroeconomic and international trade variables.

Originally published in: The Changing Distribution of Income in an Open U.S. Economy, 1994, pp. 183-216.

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