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Between-group inequality may decline despite a rising skill premium

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  • Aziz, Imran
  • Cortes, Guido Matias

Abstract

A vast literature aimed at understanding the nature and causes of wage inequality focuses on the skill premium as a key object of interest. In an environment where both the skill premium and the share of skilled workers are changing, however, the between-skill-group component of inequality may fall even as the skill premium rises – a pattern that is indeed observed in the U.S. and in many local labor markets during the 2010s. Understanding the evolution of the skill premium is therefore not always useful in terms of understanding why broad inequality measures are changing.

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  • Aziz, Imran & Cortes, Guido Matias, 2021. "Between-group inequality may decline despite a rising skill premium," Labour Economics, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:labeco:v:72:y:2021:i:c:s0927537121000981
    DOI: 10.1016/j.labeco.2021.102063
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    Cited by:

    1. Jan Pintera, 2022. "Skill-bias and Wage Inequality in the EU New Member States: Empirical Investigation," Working Papers IES 2022/26, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2022.

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    More about this item

    Keywords

    Skill premium; Skill-biased technical change; Between-group inequality;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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