By the mid-1940s, neoclassical economists felt secure within their long-run equilibrium interpretation of wage determinants. At that time, however, empirical economists attempting to reconcile real-life labor market phenomena with neoclassical theory encountered unsettling data. When confronted by a growing number of studies suggesting flaws in their theories, neoclassical economists reacted by simply developing several ad hoc explanations to account for these exceptions. Empirical economists, on the other hand, found themselves shunning theoretical models constructed to guide them in their research. Without any theoretical structure to inform their work, they also resorted to ad hoc explanations. As a result a growing schism emerged within labor economics between theory and practice.
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