Inequality and Mobility : Trends in Wage Growth for Young Adults

After two decades of rising wage inequality, it is important to examine the impact of these changes on lifetime wage growth. This paper compares the intragenerational mobility of two NLS cohorts of young white men: the first entered the labor market in the late 1960s, the second in the early 1980s. For each cohort, we analyze wage profiles across 16 years using a mixed-effects model. We find that long-term wage growth has both stagnated and become more unequal in recent years. Changes in the composition of and returns to education, experience, occupation and other covariates explain about half the rise in inequality, leaving a significant residual. Our findings suggest a decline in the economic welfare of workers who entered the labor market in the 1980s.

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