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Skill Prices, Occupations and Changes in the Wage Structure

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  • 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
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    References listed on IDEAS

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    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.

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