Document Type

Article

Publication Date

1993

Center/Program

Center for Contract and Economic Organization

Center/Program

Program in the Law and Economics of Capital Markets

Abstract

The declining competitiveness of the U.S. manufacturing sector of the most important causes of the decline in real wages and the stagnation in the level of the median family incomes which have plagued the United States since about 1973.1 Although the reports of the decline in American living standards were greeted with some skepticism when they first appeared in the work of the Economic Policy Institute ("EPI") in 1985, they have now achieved a high level of prominence on the national policy agenda. More recent studies by EPI and other research groups urge two cures for the decline. First, employment and output in the manufacturing sectors must increase in order to sustain increases in the real median income of two to three percent per year while simultaneously reducing the national unemployment rate. Second, new forms of industrial assistance and new public and private institutions to assess industry structure and develop policy are needed to create high- wage manufacturing jobs.

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