Manufacturing Jobs and Inequality: Why is the U.S. Experience Different?
Manufacturing Jobs and Inequality: Why is the U.S. Experience Different?

Author: Natalija Novta

Publisher: International Monetary Fund

Published: 2019-09-13

Total Pages: 28

ISBN-13: 1498320457

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We examine the extent to which declining manufacturing employment may have contributed to increasing inequality in advanced economies. This contribution is typically small, except in the United States. We explore two possible explanations: the high initial manufacturing wage premium and the high level of income inequality. The manufacturing wage premium declined between the 1980s and the 2000s in the United States, but it does not explain the contemporaneous rise in inequality. Instead, high income inequality played a large role. This is because manufacturing job loss typically implies a move to the service sector, for which the worker is not skilled at first and accepts a low-skill wage. On average, the associated wage cut increases with the overall level of income inequality in the country, conditional on moving down in the wage distribution. Based on a stylized scenario, we calculate that the movement of workers to low-skill service sector jobs can account for about a quarter of the increase in inequality between the 1980s and the 2000s in the United States. Had the U.S. income distribution been more equal, only about one tenth of the actual increase in inequality could have been attributed to the loss of manufacturing jobs, according to our simulations.

Manufacturing Jobs and Inequality: Why is the U.S. Experience Different?
Manufacturing Jobs and Inequality: Why is the U.S. Experience Different?

Author: Natalija Novta

Publisher: International Monetary Fund

Published: 2019-09-13

Total Pages: 28

ISBN-13: 1513515004

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We examine the extent to which declining manufacturing employment may have contributed to increasing inequality in advanced economies. This contribution is typically small, except in the United States. We explore two possible explanations: the high initial manufacturing wage premium and the high level of income inequality. The manufacturing wage premium declined between the 1980s and the 2000s in the United States, but it does not explain the contemporaneous rise in inequality. Instead, high income inequality played a large role. This is because manufacturing job loss typically implies a move to the service sector, for which the worker is not skilled at first and accepts a low-skill wage. On average, the associated wage cut increases with the overall level of income inequality in the country, conditional on moving down in the wage distribution. Based on a stylized scenario, we calculate that the movement of workers to low-skill service sector jobs can account for about a quarter of the increase in inequality between the 1980s and the 2000s in the United States. Had the U.S. income distribution been more equal, only about one tenth of the actual increase in inequality could have been attributed to the loss of manufacturing jobs, according to our simulations.

When Work Disappears
When Work Disappears

Author: William Julius Wilson

Publisher: Vintage

Published: 2011-06-08

Total Pages: 353

ISBN-13: 0307794695

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Wilson, one of our foremost authorities on race and poverty, challenges decades of liberal and conservative pieties to look squarely at the devastating effects that joblessness has had on our urban ghettos. Marshaling a vast array of data and the personal stories of hundreds of men and women, Wilson persuasively argues that problems endemic to America's inner cities--from fatherless households to drugs and violent crime--stem directly from the disappearance of blue-collar jobs in the wake of a globalized economy. Wilson's achievement is to portray this crisis as one that affects all Americans, and to propose solutions whose benefits would be felt across our society. At a time when welfare is ending and our country's racial dialectic is more strained than ever, When Work Disappears is a sane, courageous, and desperately important work. "Wilson is the keenest liberal analyst of the most perplexing of all American problems...[This book is] more ambitious and more accessible than anything he has done before." --The New Yorker

NBER Macroeconomics Annual 2018
NBER Macroeconomics Annual 2018

Author: Martin Eichenbaum

Publisher: University of Chicago Press Journals

Published: 2019-08-05

Total Pages: 0

ISBN-13: 9780226645728

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This volume contains six studies on current topics in macroeconomics. The first shows that while assuming rational expectations is unrealistic, a finite-horizon forward planning model can yield results similar to those of a rational expectations equilibrium. The second explores the aggregate risk of the U.S. financial sector, and in particular whether it is safer now than before the 2008 financial crisis. The third analyzes “factorless income,” output that is not measured as capital or labor income. Next, a study argues that the financial crisis increased the perceived risk of a very bad economic and financial outcome, and explores the propagation of large, rare shocks. The next paper documents the substantial recent changes in the manufacturing sector and the decline in employment among prime-aged Americans since 2000. The last paper analyzes the dynamic macroeconomic effects of border adjustment taxes.

Causes and Consequences of Income Inequality
Causes and Consequences of Income Inequality

Author: Ms.Era Dabla-Norris

Publisher: International Monetary Fund

Published: 2015-06-15

Total Pages: 39

ISBN-13: 1513547437

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This paper analyzes the extent of income inequality from a global perspective, its drivers, and what to do about it. The drivers of inequality vary widely amongst countries, with some common drivers being the skill premium associated with technical change and globalization, weakening protection for labor, and lack of financial inclusion in developing countries. We find that increasing the income share of the poor and the middle class actually increases growth while a rising income share of the top 20 percent results in lower growth—that is, when the rich get richer, benefits do not trickle down. This suggests that policies need to be country specific but should focus on raising the income share of the poor, and ensuring there is no hollowing out of the middle class. To tackle inequality, financial inclusion is imperative in emerging and developing countries while in advanced economies, policies should focus on raising human capital and skills and making tax systems more progressive.

The State of Working America 2006/2007
The State of Working America 2006/2007

Author: Lawrence R. Mishel

Publisher: Comstock Publishing Associates

Published: 2007

Total Pages: 448

ISBN-13: 9780801445293

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Praise for previous editions of The State of Working America: "The State of Working America remains unrivaled as the most-trusted source for a comprehensive understanding of how working Americans and their families are faring in today's economy."--Robert B. Reich"It is the inequality of wealth, argue the authors, rather than new technology (as some would have it), that is responsible for the failure of America's workplace to keep pace with the country's economic growth. The State of Working America is a well-written, soundly argued, and important reference book."--Library Journal "If you want to know what happened to the economic well-being of the average American in the past decade or so, this is the book for you. It should be required reading for Americans of all political persuasions."--Richard Freeman, Harvard University "A truly comprehensive and useful book that provides a reality check on loose statements about U.S. labor markets. It should be cheered by all Americans who earn their living from work."--William Wolman, former chief economist, CNBC's Business Week "The State of Working America provides very valuable factual and analytic material on the economic conditions of American workers. It is the very best source of information on this important subject."--Ray Marshall, University of Texas, former U.S. Secretary of Labor"An indispensable work . . . on family income, wages, taxes, employment, and the distribution of wealth."--Simon Head, The New York Review of Books "No matter what political camp you're in, this is the single most valuable book I know of about the state of America, period. It is the most referenced, most influential resource book of its kind."--Jeff Madrick, author, The End of Affluence "This book is the single best yardstick for measuring whether or not our economic policies are doing enough to ensure that our economy can, once again, grow for everybody."--Richard A. Gephardt "The best place to review the latest developments in changes in the distribution of income and wealth."--Lester ThurowThe State of Working America, prepared biennially since 1988 by the Economic Policy Institute, includes a wide variety of data on family incomes, wages, taxes, unemployment, wealth, and poverty-data that enable the authors to closely examine the effect of the economy on the living standards of the American people.

Manufacturing Jobs in the U.S.
Manufacturing Jobs in the U.S.

Author: Amy Francis

Publisher: Greenhaven Publishing LLC

Published: 2015-04-27

Total Pages: 121

ISBN-13: 0737771747

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One of America's greatest strengths is its manufacturing know-how. Many companies, however, send jobs off shore to other countries. This causes a number of issues relating to employment, trade, and the county's economy. This book discusses whether there is a strong American workforce available for new manufacturing jobs, whether American youths are interested in manufacturing, and whether the United States can compete with overseas manufacturers.

Wage Inequality in American Manufacturing, 1820-1940
Wage Inequality in American Manufacturing, 1820-1940

Author: Jeremy Atack

Publisher:

Published: 2023

Total Pages: 0

ISBN-13:

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The consensus view among economic historians is that wage inequality in American manufacturing followed an inverted-U path from the early nineteenth century until just before World War Two. The previous literature, however, has been unable to fully document this path over time, or fully assess the role of explanatory factors such as changes in firm organization and technology. We provide fresh evidence that allow us to better document the inverted-U and its causes. In the first part of the paper, we use the U.S. Department of Labor's 1899 "Hand and Machine Labor" study to argue that wage inequality within manufacturing establishments rose over the nineteenth century, primarily because of increasing division of labor In the second part, we use data for Massachusetts from state reports to construct a new time series on wage inequality among production workers, which declined from the early 1890s to the late 1930s, mainly because of compression in the left tail of the distribution. Analysis of industry panel data suggest that electrification was the main factor behind the compression.

Torn Apart?
Torn Apart?

Author: Eric D. Gould

Publisher:

Published: 2018

Total Pages: 51

ISBN-13:

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This paper examines the impact of manufacturing employment decline on the socio-economic outcomes within and between black and white Americans from 1960 to 2010. Exploiting variation across cities and over time, the analysis shows that manufacturing decline negatively impacted blacks (men, women, and children) in terms of their wages, employment, marriage rates, house values, poverty rates, death rates, single parenthood, teen motherhood, child poverty, and child mortality. In addition, the decline in manufacturing increased inequality within the black community in terms of overall wages and the gaps between education groups in wages, employment, and marriage rates. Many of the same patterns are found for whites, but to a lesser degree -- leading to larger gaps between whites and blacks in wages, marriage patterns, poverty, single-parenthood, and death rates. The results are robust to the inclusion or exclusion of several control variables, and the use of a "shift-share" instrument for the local manufacturing employment share. Overall, the decline in manufacturing is reducing socio-economic conditions in general while increasing inequality within and between racial groups -- which is consistent with a stronger general equilibrium effect of the loss of highly-paid, lower-skilled jobs on the less-educated segments of the population.