The Effect of Labor Market Institutions on Salaried and Self-Employed Less-Educated Men in the 1980s

Posted: 15 Feb 2011

See all articles by Harry A. Krashinsky

Harry A. Krashinsky

University of Toronto - Centre For Industrial Relations

Date Written: October 1, 2008

Abstract

Less-educated workers exhibited negative real wage growth from the late 1970s to the early 1990s. Frequently cited to explain this pattern are such labor market trends as union decline and the falling real value of the minimum wage, but also of concern is the possible contribution of decreased demand, caused by factors such as skill-biased technological change. To investigate the relative importance of these determinants, the author, using CPS data, compares the experiences of wage-and-salary workers with those of the self-employed. Wages apparently declined little for less-educated self-em¬ployed workers, but greatly for similar wage-and-salary workers. Because self-employed workers are affected by the same demand shocks as wage-and-salary workers but are not subject to labor market institutions such as the minimum wage or labor unions, the author concludes that the main source of the observed negative real wage growth was the decline of labor market institutions, not skill-biased technological change.

Keywords: wage inequality, self-employment, minimum wages, labor unions

JEL Classification: J30, J31, J38

Suggested Citation

Krashinsky, Harry A., The Effect of Labor Market Institutions on Salaried and Self-Employed Less-Educated Men in the 1980s (October 1, 2008). Industrial and Labor Relations Review, Vol. 62, No. 1, 2008, Available at SSRN: https://ssrn.com/abstract=1761391

Harry A. Krashinsky (Contact Author)

University of Toronto - Centre For Industrial Relations ( email )

121 St. George Street
Toronto M5S 2E8
Canada
(416) 978-5696 (Phone)

Do you want regular updates from SSRN on Twitter?

Paper statistics

Abstract Views
238
PlumX Metrics