IDEAS home Printed from https://ideas.repec.org/p/red/sed017/208.html
   My bibliography  Save this paper

Skill Prices, Occupations and Changes in the Wage Structure

Author

Listed:
  • Chris Taber

    (Northwestern University)

  • Nicolas Roys

    (University of Wisconsin Madison)

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.

Suggested Citation

  • Chris Taber & Nicolas Roys, 2017. "Skill Prices, Occupations and Changes in the Wage Structure," 2017 Meeting Papers 208, Society for Economic Dynamics.
    • Handle: RePEc:red:sed017:208
    as

    Download full text from publisher

    File URL: https://red-files-public.s3.amazonaws.com/meetpapers/2017/paper_208.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gueorgui Kambourov & Iourii Manovskii, 2009. "Occupational Specificity Of Human Capital," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 63-115, February.
    2. Audra J. Bowlus & Chris Robinson, 2012. "Human Capital Prices, Productivity, and Growth," American Economic Review, American Economic Association, vol. 102(7), pages 3483-3515, December.
    3. Carl Sanders & Christopher Taber, 2012. "Life-Cycle Wage Growth and Heterogeneous Human Capital," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 399-425, July.
    4. David H. Autor & David Dorn, 2013. "The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market," American Economic Review, American Economic Association, vol. 103(5), pages 1553-1597, August.
    5. Neal, Derek, 1999. "The Complexity of Job Mobility among Young Men," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 237-261, April.
    6. David J. Deming, 2017. "The Growing Importance of Social Skills in the Labor Market," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(4), pages 1593-1640.
    7. Gourieroux, C & Monfort, A & Renault, E, 1993. "Indirect Inference," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(S), pages 85-118, Suppl. De.
    8. James Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explanations With A Dynamic General Equilibrium Model of Labor Earnings With Heterogeneous Agents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 1-58, January.
    9. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
    10. Acemoglu, Daron & Autor, David, 2011. "Skills, Tasks and Technologies: Implications for Employment and Earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 12, pages 1043-1171, Elsevier.
    11. Matthew Johnson & Michael P. Keane, 2013. "A Dynamic Equilibrium Model of the US Wage Structure, 1968-1996," Journal of Labor Economics, University of Chicago Press, vol. 31(1), pages 1-49.
    12. Joseph G. Altonji & Prashant Bharadwaj & Fabian Lange, 2012. "Changes in the Characteristics of American Youth: Implications for Adult Outcomes," Journal of Labor Economics, University of Chicago Press, vol. 30(4), pages 783-828.
    13. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75(4), pages 352-352.
    14. Ilse Lindenlaub, 2017. "Sorting Multidimensional Types: Theory and Application," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(2), pages 718-789.
    15. Donghoon Lee & Kenneth I. Wolpin, 2006. "Intersectoral Labor Mobility and the Growth of the Service Sector," Econometrica, Econometric Society, vol. 74(1), pages 1-46, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Georg Graetz, 2019. "Labor Demand in the Past, Present, and Future," European Economy - Discussion Papers 114, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    2. Carlos Carrillo‐Tudela & Ludo Visschers, 2023. "Unemployment and Endogenous Reallocation Over the Business Cycle," Econometrica, Econometric Society, vol. 91(3), pages 1119-1153, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nicolas A. Roys & Christopher R. Taber, 2019. "Skill Prices, Occupations, and Changes in the Wage Structure for Low Skilled Men," NBER Working Papers 26453, National Bureau of Economic Research, Inc.
    2. Ma, Jie, 2020. "High skilled immigration and the market for skilled labor: The role of occupational choice," Labour Economics, Elsevier, vol. 63(C).
    3. Carl Sanders & Christopher Taber, 2012. "Life-Cycle Wage Growth and Heterogeneous Human Capital," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 399-425, July.
    4. David J. Deming, 2017. "The Growing Importance of Social Skills in the Labor Market," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(4), pages 1593-1640.
    5. Ralph Stinebrickner & Todd Stinebrickner & Paul Sullivan, 2019. "Job Tasks, Time Allocation, and Wages," Journal of Labor Economics, University of Chicago Press, vol. 37(2), pages 399-433.
    6. Cavaglia, Chiara & Etheridge, Ben, 2020. "Job polarization and the declining quality of knowledge workers: Evidence from the UK and Germany," Labour Economics, Elsevier, vol. 66(C).
    7. Bhalotra, Sonia R & Fernández, Manuel & Wang, Fan, 2022. "The distribution of the gender wage gap : An equilibrium model," CAGE Online Working Paper Series 614, Competitive Advantage in the Global Economy (CAGE).
    8. 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.
    9. Audra Bowlus & Lance Lochner & Chris Robinson & Eda Suleymanoglu, 2023. "Wages, Skills, and Skill-Biased Technical Change: The Canonical Model Revisited," Journal of Human Resources, University of Wisconsin Press, vol. 58(6), pages 1783-1819.
    10. Michael J. Böhm & Hans-Martin von Gaudecker & Felix Schran, 2024. "Occupation Growth, Skill Prices, and Wage Inequality," Journal of Labor Economics, University of Chicago Press, vol. 42(1), pages 201-243.
    11. Ariell Reshef, 2013. "Is Technological Change Biased Towards the Unskilled in Services? An Empirical Investigation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(2), pages 312-331, April.
    12. Bhalotra, Sonia & Fernandez Sierra, Manuel, 2018. "The distribution of the gender wage gap," ISER Working Paper Series 2018-10, Institute for Social and Economic Research.
    13. Christian Belzil & Jörgen Hansen, 2020. "The evolution of the US family income–schooling relationship and educational selectivity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 35(7), pages 841-859, November.
    14. Jaume, David, 2021. "The labor market effects of an educational expansion," Journal of Development Economics, Elsevier, vol. 149(C).
    15. David J Deming & Kadeem Noray, 2020. "Earnings Dynamics, Changing Job Skills, and STEM Careers," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(4), pages 1965-2005.
    16. Nicole Bosch & Bas ter Weel, 2013. "Labour-market outcomes of older workers in the Netherlands: Measuring job prospects using the occupational age structure," CPB Discussion Paper 234.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    17. Diego Restuccia & Guillaume Vandenbroucke, 2013. "The Evolution Of Education: A Macroeconomic Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(3), pages 915-936, August.
    18. Keller, Elisa, 2014. "The slowdown in American educational attainment," Journal of Economic Dynamics and Control, Elsevier, vol. 46(C), pages 252-270.
    19. Michael J. Böhm, 2020. "The price of polarization: Estimating task prices under routine‐biased technical change," Quantitative Economics, Econometric Society, vol. 11(2), pages 761-799, May.
    20. Christian Belzil & Jorgen Hansen, 2020. "Reconciling Changes in Wage Inequality with Changes in College Selectivity using a Behavioral Model," Working Papers 20005, Concordia University, Department of Economics.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed017:208. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christian Zimmermann (email available below). General contact details of provider: https://edirc.repec.org/data/sedddea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.