Can the Great Compression be Explained by Wartime Wage Controls?
Principal Investigator(s): View help for Principal Investigator(s) Chris Vickers, Auburn University; Nicolas L. Ziebarth, University of Missouri and NBER
Version: View help for Version V1
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| Code | 04/18/2025 09:18:AM | ||
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text/x-web-markdown | 7.2 KB | 04/18/2025 05:18:AM |
Project Citation:
Vickers, Chris, and Ziebarth, Nicolas L. Can the Great Compression be Explained by Wartime Wage Controls? Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2025-04-18. https://doi.org/10.3886/E227008V1
Project Description
Summary:
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Replication files for Explorations in Economic History
Abstract: The wage controls of the National War Labor Board (NWLB) have been credited with contributing to the decline in income inequality from 1940 to 1950 that occurred along many different dimensions including across regions and occupations. We calculate an upper bound for the effect of the NWLB during this decade by assuming the controls were maximally binding. At the upper bound, the controls could explain an important fraction of cross-region convergence, but they likely had little effect on inequality between occupations. Moreover, because of sorting by race and education into occupations, the controls cannot explain much of the narrowing of the educational skill premium nor the racial gap. We conclude that the controls are not a ``one size fits all" explanation for the Great Compression.
Abstract: The wage controls of the National War Labor Board (NWLB) have been credited with contributing to the decline in income inequality from 1940 to 1950 that occurred along many different dimensions including across regions and occupations. We calculate an upper bound for the effect of the NWLB during this decade by assuming the controls were maximally binding. At the upper bound, the controls could explain an important fraction of cross-region convergence, but they likely had little effect on inequality between occupations. Moreover, because of sorting by race and education into occupations, the controls cannot explain much of the narrowing of the educational skill premium nor the racial gap. We conclude that the controls are not a ``one size fits all" explanation for the Great Compression.
Scope of Project
Subject Terms:
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wage controls;
World War II;
inequality;
National War Labor Board
Geographic Coverage:
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United States
Time Period(s):
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1/1/1940 – 12/31/1950
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