Skill Prices, Occupations and Changes in the Wage Structure

Chris Taber and Nicolas Roys
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Chris Taber: Northwestern University

No 208, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: This paper proposes and estimates a model of occupational choice with time-varying skills prices and heterogeneous human capital to understand the evolution of the wage structure since 1979. A worker’s multi-dimensional skills are exploited differently across different occupations. We allow for a rich specification of technological change which has heterogenous effects on different occupations and different parts of the skill distribution. We estimate the model combining three datasets: (1) O’NET, to measure skill intensity across occupations, (2) NLSY, to identify life-cycle supply effects, and (3) CPS, to estimate the role of technology. The return to inter-personal skills has steadily increased while the returns to cognitive and physical skills have declined. The rise of wage inequality is driven by technological change that favors high-skilled’ individual within occupation. The rise of services and the decline of manual occupations cannot be understood with a competitive labor market model.

Date: 2017
New Economics Papers: this item is included in nep-dge
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:red:sed017:208

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