The Internationalization of the U.S. Labor Market and the Wage Structure

Beginning with the important work of Murphyand Welch (1992), a great deal of recentresearch has attempted to document andexplain the dramatic changes in the wage distributionthat occurred during the 1980s (see also Katz andMurphy 1992). Practically every income group faced adecline in real wages during the 1980s. However, workersat the 33rd percentile experienced a 14 percent drop in thereal wage, workers at the 66th percentile experienced onlya 6 percent drop, and workers in the upper tail of the distributionexperienced a 1 percent wage increase. Therefore,the widening of the wage distribution occurred because therelative wage of less skilled workers fell dramatically duringthe decade.[...]