Abstract

Wage inequality, including the college/high school education premium, has increased substantially in the United States. A key part of the most widely accepted explanation for this is that skill-biased technological change accelerated during this time. This article suggests that the impact of skill-biased technological change was closer to constant in the second half of the twentieth century. This leaves a large unexplained decrease in the college/high school education premium in the 1940s and a large unexplained increase in the 1980s. The current article provides evidence that the upsurge and decline in union power during those respective periods provide a good explanation for these unexplained wage inequality changes.