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Demand for Skills and Wage Inequality

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  • Giuseppe Grasso
  • Konstantinos Tatsiramos

Abstract

We study the relationship between skill demand and wage inequality, and its association with worker and firm heterogeneity, across province‐by‐sector‐by‐occupation labor market cells. Combining Italian linked employer–employee data with aggregate skill requirements from online vacancies, we find a strong positive relationship between wages and demand for cognitive and social skills, especially when jointly required, highlighting their complementarity. When both skills are demanded more, higher wages are driven by AKM worker effects—reflecting the higher market value of a hybrid skill set—rather than firm pay, whereas higher specialized skill demand is associated with larger firm premiums but lower market‐level valuations.

Suggested Citation

  • Giuseppe Grasso & Konstantinos Tatsiramos, 2026. "Demand for Skills and Wage Inequality," LABOUR, CEIS, vol. 40(3), pages 291-309, September.
    • Handle: RePEc:bla:labour:v:40:y:2026:i:3:p:291-309
    DOI: 10.1111/labr.70023
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