Wage inequality, segregation by skill and the price of capital in an assignment model

Ángel Gavilán ()
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Ángel Gavilán: Banco de España

No 613, Working Papers from Banco de España

Abstract: Some pieces of empirical evidence suggest that in the U.S., over the last few decades, (i) wage inequality between-plants has risen much more than wage inequality within-plants and (ii) there has been an increase in the segregation of workers by skill into separate plants. This paper presents a frictionless assignment model in which these two features can be explained simultaneously as the result of the decline in the relative price of capital. Additional implications of the model regarding the skill premium and the dispersion in labor productivity across plants are also consistent with the empirical evidence.

Keywords: wage inequality; segregation by skill; assignment model; price of capital (search for similar items in EconPapers)
JEL-codes: C78 J24 J31 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2006-06
New Economics Papers: this item is included in nep-bec, nep-hrm and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0613

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