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The Unexpected Compression: Employment and Wage Trends Before and After the Pandemic
Arindrajit Dube, Professor of Economics, UMass Amherst
Abstract: We present evidence that labor market tightness following the pandemic led to an increase in labor market competition. Even though low-wage jobs were hit particularly hard during the pandemic, the subsequent rebound led to an unexpected compression in the wage distribution. Wages have been rising the fastest at the bottom, and slowest at the top---the opposite of what we have observed for much of the past four decades---yielding a fall in the college wage premium and a compression of wage inequality. This pattern is accompanied by a sharp increase in job-to-job separations, which are associated with rapid nominal wage growth for non-college workers. The change in separations have been much higher at jobs paying particularly low wages, leading to a doubling of the wage-separations elasticity, a measure of competition in the labor market. Wage growth among job-stayers is far less pronounced. (co-authored with David Autor, Ford Professor of Economics, MIT)
Arindrajit Dube is Professor of Economics at the University of Massachusetts Amherst. His work focuses on labor economics, along with health economics, public finance, and political economy. He received a B.A. in Economics and M.A. in Development Policy from Stanford University, and a Ph.D. in Economics from the University of Chicago. He has held positions of visiting Professor at MIT Department of Economics, and Boston University’s Questrom School of Business. He is also currently a research associate at NBER and a research fellow at IZA.
A welcome-back luncheon for the Stone Program community will precede this seminar at 11:30am in the Allison Dining Room.
