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Linear Synthesis of Skill Distribution

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  • Finis Welch

Abstract

This paper provides a method for linearly combining skill classes so that the number of classes required to describe a skill distribution is minimized. The principal analytical device is that of distinguishing between skill classes and the characteristics of persons in a class. The distinction suggests that skill distributions may have redundant classes and, if so, the wage of laborers in the redundant classes will be linear combinations of wages in other classes. On this premise, the structure of wages by years of school completed is examined across states, showing that for the eight Census schooling classes, wages in three (1-4, 12, and 16 or more years of schooling) account for 99+ percent of the variation in the five remaining. Based on this evidence, it is argued that the schooling distribution can be approximated using three classes only.

Suggested Citation

  • Finis Welch, 1969. "Linear Synthesis of Skill Distribution," Journal of Human Resources, University of Wisconsin Press, vol. 4(3), pages 311-327.
    • Handle: RePEc:uwp:jhriss:v:4:y:1969:i:3:p:311-327
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    Cited by:

    1. James J. Heckman, 2019. "The Race Between Demand and Supply: Tinbergen’s Pioneering Studies of Earnings Inequality," De Economist, Springer, vol. 167(3), pages 243-258, September.
    2. Janet Currie & Ann Harrison, 2022. "Sharing the Costs: The Impact of Trade Reform on Capital and Labor in Morocco," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 2, pages 15-42, World Scientific Publishing Co. Pte. Ltd..
    3. Franziska Ohnsorge & Daniel Trefler, 2004. "Sorting It Out: International Trade and Protection With Heterogeneous Workers," NBER Working Papers 10959, National Bureau of Economic Research, Inc.
    4. MacIsaac, Donna & Rama, Martin, 1997. "Determinants of Hourly Earnings in Ecuador: The Role of Labor Market Regulations," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 136-165, July.
    5. Fox, Jeremy T. & Smeets, Valérie, 2007. "Do Input Quality and Structural Productivity Estimates Drive Measured Differences in Firm Productivity?," Working Papers 07-2, University of Aarhus, Aarhus School of Business, Department of Economics.
    6. Gruber, Jonathan, 1997. "The Incidence of Payroll Taxation: Evidence from Chile," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 72-101, July.
    7. Firpo, Sergio & Fortin, Nicole M. & Lemieux, Thomas, 2011. "Occupational Tasks and Changes in the Wage Structure," IZA Discussion Papers 5542, Institute of Labor Economics (IZA).
    8. Bell, Linda A, 1997. "The Impact of Minimum Wages in Mexico and Colombia," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 102-135, July.
    9. Zvi Eckstein & Yoram Weiss, 2004. "On The Wage Growth of Immigrants: Israel, 1990-2000," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 665-695, June.
    10. Shintaro Yamaguchi, 2012. "Tasks and Heterogeneous Human Capital," Journal of Labor Economics, University of Chicago Press, vol. 30(1), pages 1-53.
    11. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed the Labor Market?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(4), pages 1169-1213.
    12. Dustmann, Christian & Fadlon, Itzhak & Weiss, Yoram, 2011. "Return migration, human capital accumulation and the brain drain," Journal of Development Economics, Elsevier, vol. 95(1), pages 58-67, May.
    13. Suen, Wing, 1997. "Decomposing Wage Residuals: Unmeasured Skill or Statistical Artifact?," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 555-566, July.
    14. repec:eee:labchp:v:1:y:1986:i:c:p:429-471 is not listed on IDEAS
    15. Steve Cicala & Roland G. Fryer, Jr. & Jörg L. Spenkuch, 2011. "A Roy Model of Social Interactions," NBER Working Papers 16880, National Bureau of Economic Research, Inc.
    16. Derek Neal & Sherwin Rosen, 1998. "Theories of the Distribution of Labor Earnings," NBER Working Papers 6378, National Bureau of Economic Research, Inc.
    17. Heiland, Inga & Kohler, Wilhelm, 2022. "Heterogeneous workers, trade, and migration," European Economic Review, Elsevier, vol. 144(C).
    18. Revenga, Ana, 1997. "Employment and Wage Effects of Trade Liberalization: The Case of Mexican Manufacturing," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 20-43, July.
    19. Hamermesh, Daniel S., 1987. "The demand for labor in the long run," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 8, pages 429-471, Elsevier.

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