 A Multisector Perspective on Wage StagnationL. Rachel Ngai and Orhun Sevinc No 2026, Discussion Papers from Centre for Macroeconomics (CFM) Abstract: Low-skill workers are concentrated in sectors that experience fast productivity growth and yet their wages have been stagnating. We document evidence from U.S. states to show that a multisector perspective is crucial to understanding this divergence and stagnation. The key mechanism is a reallocation of low-skill workers from high productivity growth sectors to sectors with slower growth. We show this in a multisector model in which the faster productivity growth causes a fall in the relative price of the low-skill sector, whose output is complementary to the output of the high-skill sector. The model accounts for low-skill wage stagnation, its divergence from aggregate productivity and the rise in wage inequality during 1980- 2010. Keywords: Wage stagnation; Wage-productivity divergence; Wage inequality; Multisector model (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cfm:wpaper:2026 Access Statistics for this paper More papers in Discussion Papers from Centre for Macroeconomics (CFM) Contact information at EDIRC. |
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