A recent "revisionist " literature characterizes the pronounced rise in U.S. wage inequality since 1980
as an "episodic " event of the first-half of the 1980s driven by non-market factors (particularly a falling
real minimum wage) and concludes that continued increases in wage inequality since the late 1980s
substantially reflect the mechanical confounding effects of changes in labor force composition. Analyzing
data from the Current Population Survey for 1963 to 2005, we find limited support for these claims.
The slowing of the growth of overall wage inequality in the 1990s hides a divergence in the paths
of upper-tail (90/50) inequality -- which has increased steadily since 1980, even adjusting for changes
in labor force composition -- and lower tail (50/10) inequality, which rose sharply in the first-half of
the 1980s and plateaued or contracted thereafter. Fluctuations in the real minimum wage are not a
plausible explanation for these trends since the bulk of inequality growth occurs above the median
of the wage distribution. Models emphasizing rapid secular growth in the relative demand for skills
-- attributable to skill-biased technical change -- and a sharp deceleration in the relative supply of college
workers in the 1980s do an excellent job of capturing the evolution of the college/high-school wage
premium over four decades. But these models also imply a puzzling deceleration in relative demand
growth for college workers in the early 1990s, also visible in a recent "polarization" of skill demands
in which employment has expanded in high-wage and low-wage work at the expense of middle-wage
jobs. These patterns are potentially reconciled by a modified version of the skill-biased technical change
hypothesis that emphasizes the role of information technology in complementing abstract (high-education)
tasks and substituting for routine (middle-education) tasks.