The Impact of Industrial Restructuring on Earnings Inequality: The Decline of Steel and Earnings in Pittsburgh

Inter-industry employment shifts were largely responsible for changes in the income distribution in the Pittsburgh region during the 1980s. Kernel density estimators were used, together with decomposition techniques developed by DiNardo et al. (1996) to show that industry shifts were responsible for over 90 percent of the earnings reductions at some points on the earnings distribution. Most of the losses at the lower end of the distribution occurred in the early 1980s as the economy plunged into a deep recession. The recovery in the later part of the decade brought little improvement as earnings in the lower part of the distribution continued to fall with the increase in employment of part-time workers in the low-wage trade and service sectors.