U.S. Wages in General Equilibrium: The Effects of Prices, Technology, and Factor Supplies, 1963-1991

James Harrigan and Rita Balaban

No 6981, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Wage inequality in the United States has increased, and many suspect that the main causes are changes in technology, international competition, and factor supplies. Our empirical model estimates the general equilibrium relationship between wages and technology, prices, and factor supplies. The model is based on the neoclassical theory of production, and is implemented by assuming that GDP is a function of prices, technology levels, and supplies of capital and different types of labor. We find that relative factor supply and relative price changes are both important in explaining the growing return to skill. In particular, we find that capital accumulation and the fall in the price of traded goods served to increase the return to education.

JEL-codes: F1 J3 (search for similar items in EconPapers)
Date: 1999-02
New Economics Papers: this item is included in nep-ltv
Note: ITI
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Citations: View citations in EconPapers (19)

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Working Paper: U.S. wages in general equilibrium: the effects of prices, technology and factor supplies, 1963-1991 (1999)
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