1. THE ECONOMICS OF RECENT GENERATIONAL
CONFLICT IN THE U.S.: THE ROLE OF
DIFFERENTIAL EDUCATIONAL ATTAINMENT IN
GROWING AGE-BASED WAGE INEQUALITY
Presented by Nick Rogness

2. OBSERVATIONS IN RECENT
GENERATIONAL CONFLICT
 Between 1995-2005, hourly wages for workers aged 55-64 relative to
younger workers have exhibited an unchecked upward trend.
 In the aftermath of this rising wage inequality between older and
younger age groups and a number of other factors, economic populist
movements such as “Occupy Wall Street” gained a strong foothold
among younger Americans.
 Surging student loan debt and declining labor force participation,
especially among the Millennial generation and other young people,
fits these political movements into a broader macroeconomic context.

4. Source: CPS-IPUMS Data
Year LFPR, Ages 25-34 LFPR, Ages 55-64
1976 73.7% 57.2%
1980 78.5% 56.4%
1985 81.1% 55.2%
1987 81.4% 54.6%
1990 82.2% 55.6%
1993 81.7% 56.8%
1995 82.0% 57.8%
2000 83.8% 60.4%
2005 81.0% 64.0%
2010 81.1% 66.4%
2015 79.6% 65.1%

5. SOME RELEVANT LITERATURE
 Starting with economic literature on explanatory factors behind overall
wage inequality, the rise of the college wage premium, and skill biased
technological change.
 Blau and Goodstein (2008) argue that much of the recent increase in labor-
force participation for older male workers observed between the late
1990s-early 2000s period can be attributed to shifts in educational
composition, especially towards college attendees and graduates.
 Goldin and Katz (2008) outline a simple supply, demand, and institutions
(SDI) framework for their analysis explaining the rise in the college wage
premium.
 How well does this SDI framework translate into analyzing age-based wage
inequality?

6. BORROWING FROM GOLDIN AND
KATZ’S SDI FRAMEWORK

7. OVERALL TRENDS IN OLD-YOUNG
RELATIVE WAGES AND SUPPLY
Ln(wo/wY) Ln(Lo/LY)

8. RELATIVE SUPPLY AND DEMAND CALCULATIONS
(ANNUAL LOG CHANGE ×100)
Period Wage
Premium
Relative
Supply
Relative
Demand
(σOY=4)
Relative
Demand
(σOY=5)
1976-1994 0.89 -1.76 1.79 2.68
1995-2015 0.54 3.35 5.51 6.05
1976-1985 1.70 -2.74 4.05 5.75
1985-1995 0.56 -0.37 1.88 2.44
1995-2005 0.98 3.60 7.54 8.52
2005-2015 0.00 3.03 2.99 2.98
log(Doy) = log(O/Y) +
σoy log(wo/wy)
log(O/Y) = log(woO/wyY) –
log(wo/wy)

9. Pre-1995 Trend Slope: -0.451
S1976
S1994
S2015
D1976
D1994
D2015

10. Model 1:
(1) (2)
Relative Supply -0.0794** -0.121**
(-2.99) (-3.21)
Time 0.00814*** 0.00600***
(17.16) (6.30)
Time × Post-1994 0.00223*
(2.23)
Constant -0.0424 -0.0651
(-1.60) (-2.01)
Observations 40 40
R2 0.917 0.929
t statistics in parentheses
* p < 0.05, ** p < 0.01, *** p < 0.001
Statistical Significance of Old-Young
Relative Supply and Relative Demand
Calculations (Old-Young Relative Wages
as Dependent Variable)
Model 2:

11. So…
What drove the growth in age-based relative labor
demand?

12. DIFFERENCE IN SKILLED VS. UNSKILLED OLD-
YOUNG RELATIVE WAGE GROWTH
 Increases in old-young relative labor supply have been sharpest among
those considered “skilled” workers
 Relative old-young skilled wages have exhibited little increase;
however…
 Examining trends in the relative wage bill across skilled vs. unskilled
workers point to the role of rising educational attainment among older
workers

13. Relative Wages
Relative Supply
Relative Wage Bill
Ln((wo*Lo )/(wY * LY))

14. SKILLS-BIASED TECHNOLOGICAL
CHANGE?
(1) (2)
Change in
Relative Wage
Bill
Growth in Older
Worker Wages
Change in % of
Workers w/
Computers
0.232 0.329
(0.48) (0.79)
Constant 0.756*** 0.199**
(8.40) (3.25)
Observations 171 175
R2 0.002 0.009
Relationship Between Age-Based Wage
Inequality and Increased
Computerization

15. RISING INTERGENERATIONAL
EDUCATIONAL ATTAINMENT?
Mean Years of Schooling Across Occupations

16. RISING INTERGENERATIONAL
EDUCATIONAL ATTAINMENT?
Proportion of “Young” and “Old” Workers with
Bachelor’s Degrees and Graduate Degrees
College Completion Rates by Birth Cohort, 1930-
1975

17. CONCLUSIONS
 Skills-biased technological change has not contributed significantly to
the growth in old-young wage inequality
 Relative levels of unionization exhibit a tenuous empirical link with
growth in unskilled wage inequality
 Rising educational attainment among older workers across all forms of
occupations appears to act as the single largest contributor to the
economic age gap
 The sociological consequences of the problem have begun to be
realized