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Human-capital investment and the wage gap

Author

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  • Jürgen Meckl

    (Department of Economics, University of Konstanz, Box D 146, 78457 Konstanz, GERMANY)

  • Stefan Zink

    (Department of Economics, University of Konstanz, Box D 146, 78457 Konstanz, GERMANY)

Abstract

According to empirical studies, the wage differential by skills evolved non-monotonically in the past decades although the relative supply of skilled labor steadily increased. The present paper provides a theoretical explanation for this finding. In our setting, technological change intertemporally alters the human-capital investment incentives of heterogeneous individuals. As a consequence of changing incentives, the time path of the relative wage is U-shaped while there is a rise in the share of skilled workers.

Suggested Citation

  • Jürgen Meckl & Stefan Zink, 2002. "Human-capital investment and the wage gap," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 19(4), pages 853-859.
    • Handle: RePEc:spr:joecth:v:19:y:2002:i:4:p:853-859
    Note: Received: November 28, 2000; revised version: January 30, 2001
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    References listed on IDEAS

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    1. Oded Galor & Omer Moav, 2000. "Ability-Biased Technological Transition, Wage Inequality, and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(2), pages 469-497.
    2. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555, Elsevier.
    3. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(4), pages 1055-1089.
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    Cited by:

    1. Jürgen Meckl & Stefan Zink, 2004. "Solow and heterogeneous labour: a neoclassical explanation of wage inequality," Economic Journal, Royal Economic Society, vol. 114(498), pages 825-843, October.
    2. Hartmut Egger & Udo Kreickemeier, 2017. "Fairness, Trade, and Inequality," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 12, pages 339-380, World Scientific Publishing Co. Pte. Ltd..
    3. Jurgen Meckl & Benjamin Weigert, 2003. "Globalization, technical change and the skill premium: magnification effects from human - capital investments," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 12(4), pages 319-336.

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    More about this item

    Keywords

    Human-capital investment; Wage inequality.;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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