NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Changes in the Distribution of Wages, 1940-1950: The Public vs. the Private Sector

Robert A. Margo, T. Aldrich Finegan

NBER Working Paper No. 5389
Issued in December 1995
NBER Program(s):   DAE

Between 1940 and 1950 wage differentials within and between labor market groups narrowed significantly - the so-called 'Great Compression'. This paper disaggregates the Great Compression into its public and private components. Wage compression in the public sector, along with a decline in the pay premia received by public sector workers, explains about 40 percent of aggregate wage compression in the 1940s. The experience of the 1940s stands in stark contrast with that of the past two decades, in which a rigid public sector wage structure has dampened increases in aggregate wage inequality.

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Document Object Identifier (DOI): 10.3386/w5389

Published: Margo, Robert A. and T. Aldrich Finegan. "The Great Compression Of The 1940s: The Public Versus The Private Sector," Explorations in Economic History, 2002, v39(2,Apr), 183-203.

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