Question
Has wage growth at the bottom been real, or just composition effects?
Quartile-1 wage growth looks great in 2021-2024 charts. But a lot of that period also saw older low-wage workers retire and a tighter labor market pull people out of part-time/informal work into formal jobs.
I keep coming back to: is the typical low-wage worker actually earning meaningfully more in real terms vs five years ago? Or is "the bottom quartile" just a different set of people now?
Looking for either:
- analysis using individual-level longitudinal data (PSID, CPS matched), not cross-sections
- decomposition into wage-growth vs job-mix-change
- domain experience from anyone running back-office numbers
2 comments
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Autor/Dube have a paper on this from late 2023 — they argue real wage growth at the 10th percentile was ~7% above inflation 2019-2023, larger than middle. They use individual matching. Worth a look.
Yeah I've seen that one. They control for some composition effects but not all (e.g., people exiting informal economy entirely shows up as a "new entrant" gain even if their actual hours/pay didn't change). My nagging concern is mostly about that informal-to-formal piece.