How do changes in sectoral composition affect wages?

From Isaac Sorkin (pdf, or try this link):

… changes in sectoral composition depressed real pay growth by 2.9 percentage points from 1990 to 2016. This change in pay, however, overstates the change in the overall value of jobs because the economy is moving toward sectors that are more desirable along nonpay dimensions. Changes in nonpay compensation offset about half of the decline in pay, so that sectoral composition changes led to the equivalent of a 1.4 percentage point decline in pay since 1990. Is the role of changing sectoral composition big or small? From 1990 to 2016, real weekly earnings grew by 11.2%. All else being equal, then, these sectoral shifts were the equivalent of about three or four years of real wage growth.

The importance of manufacturing jobs — in good and bad ways — is one of the ideas which has risen in status most rapidly in the last five years.


Comments for this post are closed