Using Current Population Survey data supplemented with data from other sources, the authors analyze changes in the wage distribution in the U.S. grocery stores industry between 1984 and 1994. They find that in this industry, unlike in many others, wage inequality did not increase. Instead, real wages declined across the entire distribution, as the net effect of changes in markets, institutions, and technology was to erode the earnings of low-wage, middle-wage, and high-wage workers alike. Although there were drastic increases in grocery store size, hours of operation, and the use of scanners over the sample period, changes in labor market institutions explain most of the overall wage distribution change. Skill-biased technological change does not appear to have had appreciable effects on the wage distribution.
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