I find the great decoupling fascinating and I don't think it gets enough study. There are a couple other things that I think contributed:
The massive increase of women joining the labor market in the US just after 1970 largely as a consequence of the widespread adoption of oral contraceptives in the young population. [1]
The People's Republic Of China was formally admitted to the UN in 1971, and following that in 1972 Nixon visited - effectively opening China as an actual labor market.
Edit: I think one of the major takeaways should be that, changes in worldwide monetary policy allowed for pent up demand for globalization to be realized and that accelerated shifts from onshore to offshore manufacturing. Basically it allowed the US to stop building, and start buying.
> The massive increase of women joining the labor market in the US
This drives down the cost of labor. If, to make ends meet, you need two people working, they won't be able to easily move to pursue better employment unless both find employment at the same place at the same time, or that the new offer is significantly better than the previous one. As this would depress salaries everywhere, that's very unlikely.
Unlike increasing the labor market via immigration or population increase, women mostly live in households with men, so adding them to the pool increases the number of workers, but not the number of households. Employers need to pay enough for it to be worthwhile for the household, not the individual worker. The result is lower wages per worker.
Moving to a different geography for a substantially higher compensation. The same phenomenon depresses compensation everywhere, so chances are most people won't be able to find compensation that's enough to keep the family going.
The unlikely is that they'd find employment that's good enough to provide for the whole household elsewhere, because all geographies would be experiencing the same pressure.
Another big mover came just after, 1973, the oil supply shock. This in turn lead to stagflation.
Another thing I didn't see in that data set was the relative growth / decline of union membership; i.e. how that affected wage growth, indirect effect of negotiating power. It would also be interesting to see whether that was a leading co-factor or a following co-factor.
What interesting is looking at world oil production over the last 100 or so years. Oil production follows a smooth exponential curve right up till about 1970. And then it becomes supply constrained.
This is something I’ve always assumed to be true. It’s incredibly interesting that so much money is concentrated on the major Pacific ports (California and Washington).
I always wonder how much of the California economic claims are due to California vs due to access to cheap overseas labor with major ports.
The massive increase of women joining the labor market in the US just after 1970 largely as a consequence of the widespread adoption of oral contraceptives in the young population. [1]
The People's Republic Of China was formally admitted to the UN in 1971, and following that in 1972 Nixon visited - effectively opening China as an actual labor market.
Edit: I think one of the major takeaways should be that, changes in worldwide monetary policy allowed for pent up demand for globalization to be realized and that accelerated shifts from onshore to offshore manufacturing. Basically it allowed the US to stop building, and start buying.
[1] https://dash.harvard.edu/bitstream/handle/1/2624453/Goldin_P...