Skills, Degrees, and Labor Market Inequality

Peter Blair (pblair@clemson.edu), Papia Debroy and Justin Heck
Additional contact information
Peter Blair: Harvard Graduate School of Education
Papia Debroy: Opportunity@Work
Justin Heck: University of Michigan, Ann Arbor

No 2021-032, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: Over the past four decades, income inequality grew significantly between workers with bachelor's degrees and those with high school diplomas (often called “unskilled†). Rather than being unskilled, we argue that these workers are STARs because they are skilled through alternative routes—namely their work experience. Using the skill requirements of a worker's current job as a proxy of their actual skill, we find that though both groups of workers make transitions to occupations requiring similar skills to their previous occupations, worke rs with bachelor's degrees have dramatically better access to higher wage occupations where the skill requirements exceed the workers' observed skill. This measured opportunity gap offers a fresh explanation of income inequality by degree status and reestablishes the important role of on-the-job training in human capital formation.

Keywords: occupational training; college education; opportunity gap (search for similar items in EconPapers)
JEL-codes: I21 J24 J62 (search for similar items in EconPapers)
Date: 2021-06
New Economics Papers: this item is included in nep-lma and nep-ltv
Note: MIP
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Citations: View citations in EconPapers (1)

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