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World War II and the Changing Structure of the American Economy
| The war years coincide with the beginning of the Great Compression (see Goldin and Margo 1992), which dramatically decreased inequality between the 10th and 90th percentiles of the wage distribution until the 1970s. Wartime wage restrictions and the changing return to skills have been targeted as explanations for the narrowing of the wage gap between top and bottom earners during this period. This paper builds on previous research that documents greater population growth in counties that received relatively more war spending (Cullen and Fishback 2008) and lower educational attainment among the school age cohort most affected by mobilization due to inductions and war spending (Jaworski 2011). We consider (1) how migration into counties that received war spending during the 1940s contributed to the change in the distribution of wages now called the Great Compression and (2) whether subsequent out-migration followed demobilization and worked to affect the changing role of skills in the postwar economy.
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