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Math matters: education choices and wage inequality

Andrew Rendall and Michelle Rendall

No 160, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: SBTC is a powerful mechanism in explaining the increasing gap between educated and uneducated wages. However, SBTC cannot mimic the US within-group wage inequality. This paper provides an explanation for the observed intra-college group inequality by showing that the top decile earners' significant wage growth is underpinned by the link between ex ante ability, math-heavy college majors and highly quantitative occupations. We develop a general equilibrium model with multiple education outcomes, where wages are driven by individuals' ex ante abilities and acquired math skills. A large portion of within-group and general wage inequality is explained by math-biased technical change (MBTC).

Keywords: Wage inequality; SBTC; college majors; occupations; mathematics abilities (search for similar items in EconPapers)
JEL-codes: E20 E24 E25 I20 I24 J24 J31 (search for similar items in EconPapers)
Date: 2014-05
New Economics Papers: this item is included in nep-edu, nep-lab, nep-lma and nep-mac
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Related works:
Working Paper: Math Matters: Education Choices and Wage Inequality (2018) Downloads
Working Paper: Math Matters: Student Ability, College Majors, and Wage Inequality (2013) Downloads
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