Journal of Economic Perspectives: Vol. 11 No. 2 (Spring 1997)


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Changes in Earnings Inequality: The Role of Demand Shifts

Article Citation

Johnson, GeorgeE. 1997. "Changes in Earnings Inequality: The Role of Demand Shifts." Journal of Economic Perspectives, 11(2): 41-54.

DOI: 10.1257/jep.11.2.41


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.

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Johnson, George E. (U MI)

JEL Classifications

J31: Wage Level and Structure; Wage Differentials
J23: Labor Demand


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