Although surveys show that traditional ordering of average wages--i.e. higher earnings with higher schooling and concave age-wage profiles--have not changed during the past three decades, the actual size of the wage differentials measured by education or by work experience has varied from peak to trough by a factor of two-to-one. The patterns are not monotone, but there is a trend toward increased skill premiums. The authors first examine the structure of wages among white men distinguished by age and schooling for the period from 1963 to 1989. They then compare shifts in the distribution of wages and employment among the age x schooling categories to show in reference to a stable demand structure that employment alone cannot account for observed changes in relative wages. Finally, the authors describe the characteristics required of candidate demand shifters and offer examples using linear trend, business cycle shocks, and recent patterns of deficits in international trade. Copyright 1992, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
