Date of Award
Doctor of Philosophy
Dr. Wei-Chiao Huang
Dr. Sisay Asefa
Dr. Matthew Higgins
Dr. Kevin Hollenbeck
This dissertation is an econometric analysis of the earnings trends and instability for less-skilled workers during the 1970s through the 1990s. The study is divided into two major sections, dealing, respectively, with a longitudinal study of earnings instability and a time-series analysis of the trends in less-skilled wages.
In the first section, the empirical autocovariance structure of earnings is parameterized and estimated using the generalized method o f moments (GMM). The analysis of longitudinal earnings data indicates that unskilled earnings had become unstable during most o f the sample period particularly during the 1980s, despite the long economic expansion that took place during the same period. The decline in average job tenure among less-skilled workers, and, to a lesser extent, de-unionization and the shift to non-manufacturing jobs contributed to these results.
The second section proposes a structurally defined vector autoregressive framework to identify the response of unskilled wages to changes in trade and technology. Impulse response analysis is employed to chart out the response of unskilled wages to structural shocks in the international trading equilibrium and domestic technology. A benchmark specification of the model indicates that production wages are significantly related to movements in the price ratio. On the other hand, the rate of investment in information technology is shown to have a wage-depressing effect, at least in the long run. In most specifications, shocks to relative prices as well as trade flows have a relatively lasting and stronger effect on wages. While the influence of technology remains to be significant in some specifications, the results are indicative of a larger wage-effect of trade than was previously thought.
The overall implication of these findings is that policy options to improve the economic status of unskilled workers are limited. While demand side policies such as trade restrictions seem to be unwarranted, education and training policies that can affect the supply of unskilled workers can be effective, albeit under overwhelming odds.
Mamo, Michael, "The Dynamics of Unskilled Wages: Analyses of Earnings Instability and Trends in the Low-Skill Labor Market in the United States" (2000). Dissertations. 1468.