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Changes in Earnings Inequality: The Role of Demand Shifts

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  • George E. Johnson

Abstract

That the relative demand for labor in the upper segment of the skill distribution has been shifting is a widely accepted 'stylized fact' in the literature on the increase in earnings inequality that has occurred since the late 1970s. Explanations of the causes of the relative demand shifts range from effects of increased integration of the world economy to skill-based technological change (reflecting, in part, the computerization of production processes). However, relative demand for skilled labor has been increasing fairly steadily since 1940, a fact having implications about the causes of both the demand shifts and recent increases in inequality.

Suggested Citation

  • George E. Johnson, 1997. "Changes in Earnings Inequality: The Role of Demand Shifts," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 41-54, Spring.
    • Handle: RePEc:aea:jecper:v:11:y:1997:i:2:p:41-54
    Note: DOI: 10.1257/jep.11.2.41
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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