We are grateful to John DiNardo for providing us with his computer programs and to seminar and conference participants at the Industry Studies of Wage Inequality conference and the University of Minnesota for helpful comments. This research was sponsored by The Retail Food Industry Center, University of Minnesota, 317 Classroom Office Building, 1994 Unlike other industries in this time period, the important change in the wage distribution is not rising inequality, but that real wages fell across the entire wage distribution. Changes in labor market institutions explain more than half of the change in the wage distribution in grocery stores. Specifically, the decline in the real value of the minimum wage explains little of the decline in the mean real wage but much of the change in the shape of the distribution between 1984 and 1994, and 95 percent of the decline at the lowest 10th percentile. The decline in union coverage in grocery stores and the narrowing of the union-nonunion wage gap explain much of the decline above the 25th percentile. A third institutional change, the use of part-time employees, is not associated with changes in grocery industry wage outcomes.One might think that the major changes in operations and technologies that occurred during this period are at least contributing factors, but we find quite the contrary. If average store size, weekly operating hours, and the use of scanning technology had remained at their lower 1984 levels, the real wage decline would have been even greater than that actually seen, and for the entire wage distribution. Changes in grocery retailing prevented an even greater decline in real wages. Again unlike many other industries, skill-biased technological change does not appear important for grocery industry wage outcomes.The basis of our analysis is a statistical technique which combines nonparametric kernel density estimation with a parametric re-weighting, applied to Current Population Survey data supplemented with secondary data sources on the Grocery industry.
Working Paper 99-04 The Retail Food Industry CenterUniversity of Minnesota
THE GROCERY STORES' WAGE DISTRIBUTION: A SEMI-PARAMETRIC ANALYSIS OF THE ROLE OF RETAILING AND LABOR MARKET INSTITUTIONSJohn W. Budd Brian P. McCallCopyright © 1999 by Budd and McCall. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies.The analyses and views reported in this paper are those of the authors. They are not necessarily endorsed by the Industrial Relations Center, by The Retail Food Industry Center, or by the University of Minnesota.The University of Minnesota is committed to the policy that all persons shall have equal access to its programs, facilities, and employment without regard to race, color, creed, religion, national origin, sex, age, marital status, disability, public assistance status, veteran status, or sexual orientation.For information on other titles in this series, write The Ret...