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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.

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Bibliographic Info

Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 04-026.

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Length: 64 pages
Date of creation: 15 Jan 2000
Date of revision: 15 Jun 2004
Handle: RePEc:pen:papers:04-026

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Keywords: Occupational Mobility; Wage Inequality; Within-Group Inequality; Human Capital; Sectoral Reallocation;

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Citations

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Cited by:
  1. Diego Comin & Erica L. Groshen & Bess Rubin, 2006. "Turbulent firms, turbulent wages?," Staff Reports 238, Federal Reserve Bank of New York.
  2. 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.
  3. 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.
  4. Josep Pijoan-Mas & Hernan Ruffo & Claudio Michelacci, 2012. "Inequality in Unemployment Risk and in Wages," 2012 Meeting Papers 794, Society for Economic Dynamics.

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