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Dynamic Comparative Advantage, Directed Mobility Across Sectors, and Wages

Author

Listed:
  • Auray Stéphane

    (CREST-ENSAI ; ULCO)

  • Fuller David

    (University of Wisconsin-Oshkosh)

  • Lkhagvasuren Damba

    (Concordia University)

  • Terracol Antoine

    (Université Paris 8)

Abstract

This paper argues that evolving comparative advantage is important not only for worker ?ows across sectors, but also for wage growth and lifetime earnings. First, the main individual-level relationship between sectoral mobility and wages is established using Panel Study of Income Dynamics. Second, a dynamic, stochastic multi-sector model with worker-sector match productivity is introduced to account for the relationship. In the model, a sector may experience simultaneous in?ows and out?ows of workers that are much larger than the corresponding net ?ows. Movers tend to have a lower wage than nonmovers both prior to, and after the move. Wages grow with sectoral tenure. Those who move more frequently tend to have lower lifetime earnings. Recent movers are more likely to move again. Labor mobility decreases with labor market experience. All these predictions of the model are consistent with data, but generated by a remarkably simple, evolving match productivity shock.

Suggested Citation

  • Auray Stéphane & Fuller David & Lkhagvasuren Damba & Terracol Antoine, 2017. "Dynamic Comparative Advantage, Directed Mobility Across Sectors, and Wages," Working Papers 2017-59, Center for Research in Economics and Statistics.
    • Handle: RePEc:crs:wpaper:2017-59
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    References listed on IDEAS

    as
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    Cited by:

    1. Daniele Coen‐Pirani, 2021. "Geographic Mobility And Redistribution," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(3), pages 921-952, August.

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    More about this item

    Keywords

    stochastic multi-sector model; labor mobility; sectoral mismatch; labor income shocks; lifetime earnings; return to tenure; autoregressive processes;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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