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Local Labor Markets and the Evolution of Inequality

Author

Listed:
  • Dan A. Black

    (Harris School of Public Policy, University of Chicago, Chicago, Illinois 60637
    NORC, Chicago, Illinois 60637
    Institute for the Study of Labor (IZA), 53113 Bonn, Germany)

  • Natalia Kolesnikova

    (Department of Economics, University of Mississippi, University, Mississippi 38677)

  • Lowell J. Taylor

    (Heinz College, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213
    NORC, Chicago, Illinois 60637
    Institute for the Study of Labor (IZA), 53113 Bonn, Germany
    National Bureau of Economic Research, Cambridge, Massachusetts 02138)

Abstract

US labor markets have experienced rising inequality over the past 30 years—as evidenced by an increased gap in wages earned by high-skill workers (e.g., college graduates) and low-skill workers (e.g., high school graduates). Empirical evidence documenting this evolution of inequality comes from studies that assess wage-education gradients at the national level. But of course people work in local labor markets that differ in important ways. We provide a theoretical framework for evaluating inequality changes when individuals work in local labor markets, and we give an empirical reassessment of inequality changes in light of the insights that emerge from our framework.

Suggested Citation

  • Dan A. Black & Natalia Kolesnikova & Lowell J. Taylor, 2014. "Local Labor Markets and the Evolution of Inequality," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 605-628, August.
    • Handle: RePEc:anr:reveco:v:6:y:2014:p:605-628
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-economics-080213-040816
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    More about this item

    Keywords

    wage regressions; cross-location variation in inequality; changes in wage inequality;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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