Definitive Study Notes on Wage Trends and Labor Economics

Importance of examining wage distribution over a significant time span (36 years).
Key focus on the purchasing power of different percentiles in the wage system.

Presentation of data:
- Lines indicate essential purchasing power changes relative to 1973.
- Sub-100 line indicates decreased purchasing power; above 100 indicates increased purchasing power.
- Example: If real income was $100 in 1973, this graph shows purchasing power changes over time.
Observations from the graph:
- Individuals below the line have experienced a decline in real income.
- Individuals above the line have seen their purchasing power increase over time.
Notable statistic:
- 50% of the population has seen their real wages decrease over the past 36 years.
- Refers to the bottom 50% of wage distribution.
- Connection made to political unrest due to economic conditions.

Economic growth has continued at around 2-3% annually.
The disconnect between economic growth and wage gains for the lower half of wage distribution is emphasized.
Statement of incomprehensibility regarding the U.S. situation compared to other developed nations.

Increases in inequality noted, particularly since the 1980s.
- Differences in economic recovery rates are discussed, contrasting situations like recessions and wars.
Example of extreme long-term income decline attributed to political regimes (such as North Korea) relevant as a comparison to the U.S. situation.

Discussion of trends from specific percentiles:
- 10th percentile outperforming the 20th, reflecting changes in middle-class earnings starting in the 1990s.
- Higher percentiles are doing significantly better economically.

Increase of women entering the workforce highlighted, noting historical context:
- In the 1950s, many women with college degrees were limited to one occupation.
- Reference to teaching as the predominant role.
As women entered the workforce, overall labor supply increased, but wages decreased due to supply exceeding demand.
Shift explained where women with higher education pursued careers.

Discussion of changing dynamics of discrimination and resulting wage disparities:
- Decrease in wage discrepancies from college graduates compared to high school graduates over time.
- Observations about education levels and their impact on labor market participation.

Statistics regarding educational attainment by those 35 and older since 1950 discussed.
- Earlier increases in years of schooling began to plateau.
- Notable differences between educational attainment in women versus men.

Wage inequality stabilized from 1945 to 1973, dramatically increasing since then.
Inequality trends noted:
- Increase in inequality between college-educated and non-college-educated workers in the 1980s.
- Bottom end inequality increased while top-end inequality remained contentious.

Key theoretical frameworks regarding how labor supply and demand influence wages:
- Supply and demand govern price determination in various markets, including labor.
- Specific focus on wage determination and labor supply curves.

Labor supply curve:
- Reflection of willingness to work at different wage levels.
- Example provided showcasing how wage influences employment willingness.
Labor demand curve:
- Reflects how much employers are willing to pay for labor at varying wage levels.

Intersection of supply and demand curves indicates equilibrium wage level.
Imbalance examples:
- Unemployment results from high wages causing excess supply.
- Low wages lead to insufficient workers compared to demand.

Understanding labor wage determination as a foundational concept.
Future lectures to expand upon factors influencing labor supply and demand, leading to subsequent discussions on variations like monopsony.