The Demand-Supply Theory of Incomes Tested by 1970 Census Figures

This article examines the demand-supply theory of incomes tested by the 1970 U.S. census figures. Contrary to previous U.S. population censuses, the 1970 volumes include one in which, for a large of occupational groups, tables are published showing earnings by education classes and age groups for race and sex groups. Earnings for the modal occupational group were considered as income for each education category. The supply factor was taken equal to the numbers of persons in each educational category employed in 1969 in specification of the theory. The crucial assumption made was that the educational structure of employment within each main occupational group was the same as in 1969. In both specifications the demand factor was estimated by a projection, five years ahead, of employment in each of the educational groups, using the same method as just described for specification of the supply factor, but assuming a lead instead of a lag. The desired composition of the labour force as seen by employers was derived from plans for the future taking into account changes in occupations to be expected on the basis of the trend 1950-70, but assuming the same educational structure within each of the main occupational groups.