Changing wage growth, 1967--1997: Causes and consequences

Over the past 30 years there has been a significant change in the amount of wage growth individuals experience over the course of their careers. Between 1967 and 198x, wage growth for young men declined from x percent over the first ten years of their career to x percent. Moreover, these changes in wage growth have varied across education groups, with individuals with lower levels of education experiencing the largest declines in wage growth, while those with a college education or more actually experiencing an increase in wage growth. This thesis begins by exploring the underlying causes of the trends in wage growth, with a particular focus on the role of demographic and technical change. We then investigate some of the implications of these changes in wage growth. In the second chapter, we examine whether young men take expected wage growth into consideration when making their labor supply decisions and hence whether changes in wage growth can explain the patterns of labor force participation observed over the past 30 years. Finally we document that these change in wage growth have been accompanied by changes in lifetime earnings and lifetime earnings inequality both across and within education groups.