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Relative Wage Variability in the United States, 1860-1983

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  • Steven G. Allen

Abstract

This paper examines the magnitude of changes in relative wages across industries between 1860 and 1983 and analyzes the macroeconomic determinants of such changes at different intervals during this period. The variance across industries in wage growth was at least four times larger before 1948 than afterward. Except for smaller year-to-year variability in output growth across industries after 1948, the macroeconomic factors examined cannot account for this increased rigidity of relative wages. Increases in average establishment size and improved communication of wage trends are probably partially responsible for the observed increase in relative wage rigidity. No single macroeconomic model was consistent with the year-to-year fluctuations in relative wage rigidity in every historical period examined.

Suggested Citation

  • Steven G. Allen, 1987. "Relative Wage Variability in the United States, 1860-1983," NBER Working Papers 2221, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:2221
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    1. Hercowitz, Zvi, 1981. "Money and the Dispersion of Relative Prices," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 328-356, April.
    2. Clarence D. Long, 1960. "Wages and Earnings in the United States, 1860-1890," NBER Books, National Bureau of Economic Research, Inc, number long60-1, July.
    3. Hamermesh, Daniel S, 1986. "Inflation and Labour Market Adjustment," Economica, London School of Economics and Political Science, vol. 53(29), pages 63-73, February.
    4. Stanley Fischer, 1981. "Relative Shocks, Relative Price Variability, and Inflation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 12(2), pages 381-442.
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