EXPLAINING INEQUALITY ACROSS MANUFACTURING PLANTS
The migration of jobs from manufacturing industry to the service sector is often blamed for the decline in pay suffered by low-skilled workers over the past two decades. But wage inequality is most pronounced within individual industries, not between sectors. To explain why labor demand is increasingly biased against low-skilled workers, one has to go down to the level of the plant. Ann Bartel and Casey Ichniowski, both of Columbia University and the NBER, and Kathryn Shaw of Carnegie Mellon University and the NBER received a grant for plant-level case studies of three manufacturing industries: steel, medical equipment, and chemicals. Despite dissimilar economic fortunes, each industry has witnessed an increase in earnings inequality. Bartel, Ichinowski, and Shaw hypothesize that innovations in products and processes, as well as new human resource practices (such as work teams, information sharing, and job rotation) have placed a premium on a range of skills, from mechanical proficiency to "people" skills. New computer-based technologies may also have raised skill requirements in these industries, although computers might equally have routinized some formerly skilled jobs. The researchers will make site visits to the plants to see, in concrete terms, how new technologies and human resource practices might be changing the skill content of jobs. They will follow-up these visits with a representative survey of the three industries, which will, in turn, be linked to longitudinal census data. This integrated data-set will allow the investigators to quantify the effects of new human resource practices and new technologies on labor demand for the period 1972 to 1992.