Inequality and Globalization Some Evidence from the United States

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Inequality and GlobalizationSome Evidence from
the United States
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• Whats Happening with US Wages?
• Rising gap in relative terms
• Stagnant and falling real wages (adjusted for
  inflation)
• Why?
• Trade
• Technology
• Weakening of labors bargaining power

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• Relative Wage Inequality for 90th and 10th
  Percentiles
• Mens Real Wages (1995 dollars)
• Womens Real Hourly Wages (1995)
• Hourly Wages for College-Educated
• Total Compensation
• Nominal Wages and Inflation
• Household Income

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• Trade or Technology?
• No change in technologys impact on economy why
  on wages?
• Evidence shown on college-educated indicates
  little relationship between technology and wages
• Trade evidence shows it accounts for part of
  wage change, not all

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• The Real Answer
• Trade and globalization induce changes in labor
  market rules
• This adds to effect of increasing trade volumes
• Weakening labor bargaining power
• Trade and investment rules
• Outsourcing
• Immigration
• Tight fiscal and monetary policy

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• Other Factors
• Falling real minimum wage 20 percent below the
  purchasing power of 1979
• Falling union membership, down to 12 of
  workforce
• Deregulation of major industries
• General liberalization and privatization
• In sum, policy-driven

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