Revisiting the Great Compression: Wage inequality in the United States, 1940-1960 (with Taylor Jaworski)

Published in Historical Methods, 2018

Recommended citation: Jaworski, Taylor and Gregory Niemesh. (2018). "Revisiting the Great Compression: Wage inequality in the United States, 1940-1960" Historical Methods. 51(1):39-48. https://www.tandfonline.com/doi/abs/10.1080/01615440.2017.1393360

There has been renewed interest in understanding the historical origins of recent inequality, which has been made possible by improved access to comprehensive data on populations within countries. This paper takes advantage of the newly available complete count of the 1940 census as well as the enlarged (and improved) samples of the 1950 and 1960 censuses for the United States to revisit the seminal work of Goldin and Margo (1992) on the Great Compression in the immediate aftermath of World War II. These authors originally worked with samples of the 1940, 1950, and 1960 censuses that were smaller than what is currently available. Thus, their estimates for specific skill, education, experience, and occupational groups are imprecisely estimated. By replicating their findings in larger samples we are able to improve the reliability (i.e., inference) of GM’s quantitative results. Overall, we show that the Great Compression followed the basic pattern initially reported by GM: the difference between 90th and 10th percentiles of log weekly wages was 1.45 in 1940, 1.18 in 1950, and 1.23. However, we find that educational premiums started from a lower base in 1940, with a smaller decline to 1950 and 1960.

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Recommended citation: Jaworski, Taylor and Gregory Niemesh. (2018). “Revisiting the Great Compression: Wage inequality in the United States, 1940-1960” Historical Methods. 51(1):39-48.