Departmental Seminar: Nicolas Roys (Royal Halloway)
Joint work with Christopher Taber (University of Wisconsin)
This paper proposes and estimates a model of occupational choice with multi- dimensional skills, time-varying skill prices and labor market frictions 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 differ- ent 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. Our three most important findings are (1) the return to inter-personal skills has steadily increased while the returns to cognitive and physical skills have declined, (2) the rise of wage inequality is driven by technological change that favors high-skilled’ individual within occupation, (3) the rise of services and the decline of manual occupations cannot be understood with a competitive labor market model.
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