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Changes in the Distribution of Wages, 1940-1950: The Public vs. the Private Sector

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  • Robert A. Margo
  • T. Aldrich Finegan

Abstract

Between 1940 and 1950 wage differentials within and between labor market groups narrowed significantly - the so-called 'Great Compression'. This paper disaggregates the Great Compression into its public and private components. Wage compression in the public sector, along with a decline in the pay premia received by public sector workers, explains about 40 percent of aggregate wage compression in the 1940s. The experience of the 1940s stands in stark contrast with that of the past two decades, in which a rigid public sector wage structure has dampened increases in aggregate wage inequality.

Suggested Citation

  • Robert A. Margo & T. Aldrich Finegan, 1995. "Changes in the Distribution of Wages, 1940-1950: The Public vs. the Private Sector," NBER Working Papers 5389, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:5389
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    References listed on IDEAS

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    3. Steven F. Venti, 1987. "Wages in the Federal and Private Sectors," NBER Chapters, in: Public Sector Payrolls, pages 147-182, National Bureau of Economic Research, Inc.
    4. Lawrence Katz & Alan Krueger, 1991. "Changes in the Structure of Wages in the Public and Private Sectors," Working Papers 662, Princeton University, Department of Economics, Industrial Relations Section..
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    7. Claudia Goldin & Robert A. Margo, 1992. "The Great Compression: The Wage Structure in the United States at Mid-Century," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 1-34.
    8. Mary Ellen Benedict & Kathryn Shaw, 1995. "The Impact of Pension Benefits on the Distribution of Earned Income," ILR Review, Cornell University, ILR School, vol. 48(4), pages 740-757, July.
    9. Finegan, T. Aldrich & Margo, Robert A., 1994. "Work Relief and the Labor Force Participation of Married Women in 1940," The Journal of Economic History, Cambridge University Press, vol. 54(1), pages 64-84, March.
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    Cited by:

    1. Raquel Rangel de Meireles Guimarães & Luisa Pimenta Terra & Anna Carolina Martins Pinto & Cibele Comini César, 2010. "Diferenciais Regionais No Retorno À Participação No Setor Público No Brasil, 2005," Anais do XIV Semin·rio sobre a Economia Mineira [Proceedings of the 14th Seminar on the Economy of Minas Gerais], in: Anais do XIV Seminário sobre a Economia Mineira [Proceedings of the 14th Seminar on the Economy of Minas Gerais], Cedeplar, Universidade Federal de Minas Gerais.
    2. Jose Pagan & Jose Tijerina-Guajardo, 2000. "Increasing wage dispersion and the changes in relative employment and wages in Mexico's urban informal sector: 1987-1993," Applied Economics, Taylor & Francis Journals, vol. 32(3), pages 335-347.

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    More about this item

    JEL classification:

    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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