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Occupational Mobility and Wage Inequality, Second Version

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  • Gueorgui Kambourov

    (Department of Economics, University of Toronto)

  • Iourii Manovskii

    (Department of Economics, University of Pennsylvania)

Abstract

In this study we argue that wage inequality and occupational mobility are intimately related. We are motivated by our empirical findings that human capital is occupation-specific and that the fraction of workers switching occupations in the United States was as high as 16% a year in the early 1970s and had increased to 19% by the early 1990s. We develop a general equilibrium model with occupation-specific human capital and heterogeneous experience levels within occupations. We argue that the increase in occupational mobility was due to the increase in the variability of productivity shocks to occupations. The model, calibrated to match the increase in occupational mobility, accounts for over 90% of the increase in wage inequality over the period. A distinguishing feature of the theory is that it accounts for changes in within-group wage inequality and the increase in the variability of transitory earnings.

Suggested Citation

  • Gueorgui Kambourov & Iourii Manovskii, 2000. "Occupational Mobility and Wage Inequality, Second Version," PIER Working Paper Archive 04-026, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 15 Jun 2004.
    • Handle: RePEc:pen:papers:04-026
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    References listed on IDEAS

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    Cited by:

    1. Peter Cappelli & Monika Hamori, 2013. "Who Says Yes When the Headhunter Calls? Understanding Executive Job Search Behavior," NBER Working Papers 19295, National Bureau of Economic Research, Inc.
    2. Comin, Diego & Groshen, Erica L. & Rabin, Bess, 2009. "Turbulent firms, turbulent wages?," Journal of Monetary Economics, Elsevier, vol. 56(1), pages 109-133, January.
    3. Uta Schoenberg & Christina Gathmann, 2006. "How General is Specific Human Capital? Using Mobility Patterns to Study Skill Transferability in the Labor Market," 2006 Meeting Papers 598, Society for Economic Dynamics.
    4. Josep Pijoan-Mas & Hernan Ruffo & Claudio Michelacci, 2012. "Inequality in Unemployment Risk and in Wages," 2012 Meeting Papers 794, Society for Economic Dynamics.
    5. Olga Lazareva, 2009. "Health Effects of Occupational Change," Working Papers w0129, New Economic School (NES).
    6. John Douglas Skåtun & Ioannis Theodossiou, 2011. "Personnel Decisions, Wage Profiles and Investment in Firms," British Journal of Industrial Relations, London School of Economics, vol. 49(4), pages 742-766, December.
    7. Cécile Detang-Dessendre & Sonia Bellit, 2013. "Les trajectoires professionnelles des salariés agricoles / Career paths of agricultural workers," INRA UMR CESAER Working Papers 2013/3, INRA UMR CESAER, Centre d'’Economie et Sociologie appliquées à l'’Agriculture et aux Espaces Ruraux.

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    More about this item

    Keywords

    Occupational Mobility; Wage Inequality; Within-Group Inequality; Human Capital; Sectoral Reallocation;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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