IDEAS home Printed from https://ideas.repec.org/a/ucp/jhucap/v4y2010i1p35-61.html
   My bibliography  Save this article

Sector-Specific Human Capital and the Distribution of Earnings

Author

Listed:
  • Eric Smith

Abstract

This paper demonstrates the way in which assignment frictions-the limited ability of workers to find jobs in which they have a comparative advantage-affect the level and composition of human capital acquisition as well as the distribution of income. As workers become more likely to find their preferred job, they specialize more. Specialization raises expected income. It also exposes workers to a greater downside loss when the more desired employment opportunities are unavailable. More specialization thereby raises the earnings divide between those who match well and those who do not, which under some conditions leads to greater inequality. (c) 2010 by The University of Chicago. All rights reserved.

Suggested Citation

  • Eric Smith, 2010. "Sector-Specific Human Capital and the Distribution of Earnings," Journal of Human Capital, University of Chicago Press, vol. 4(1), pages 35-61.
    • Handle: RePEc:ucp:jhucap:v:4:y:2010:i:1:p:35-61
    DOI: 10.1086/655467
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/655467
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1086/655467?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. John Van Reenen, 1996. "The Creation and Capture of Rents: Wages and Innovation in a Panel of U. K. Companies," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(1), pages 195-226.
    2. Claudia Goldin & Lawrence F. Katz, 1999. "The Returns to Skill in the United States across the Twentieth Century," NBER Working Papers 7126, National Bureau of Economic Research, Inc.
    3. Konstantinos Eleftheriou, 2008. "Matching, Specialties and Wage Inequality," Economics Bulletin, AccessEcon, vol. 10(11), pages 1-12.
    4. 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.
    5. Isaac Ehrlich & Jinyoung Kim, 2007. "The Evolution of Income and Fertility Inequalities over the Course of Economic Development: A Human Capital Perspective," Journal of Human Capital, University of Chicago Press, vol. 1(1), pages 137-174.
    6. repec:ebl:ecbull:v:10:y:2008:i:11:p:1-12 is not listed on IDEAS
    7. Machin, Stephen & Van Reenen, John, 2007. "Changes in wage inequality," LSE Research Online Documents on Economics 4667, London School of Economics and Political Science, LSE Library.
    8. Heckman, James J & Honore, Bo E, 1990. "The Empirical Content of the Roy Model," Econometrica, Econometric Society, vol. 58(5), pages 1121-1149, September.
    9. Gary S. Becker & Kevin M. Murphy, 2007. "Education and Consumption: The Effects of Education in the Household Compared to the Marketplace," Journal of Human Capital, University of Chicago Press, vol. 1(1), pages 9-35.
    10. Rosen, Sherwin, 1983. "Specialization and Human Capital," Journal of Labor Economics, University of Chicago Press, vol. 1(1), pages 43-49, January.
    11. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 733-783, October.
    12. Thomas Lemieux, 2006. "Increasing Residual Wage Inequality: Composition Effects, Noisy Data, or Rising Demand for Skill?," American Economic Review, American Economic Association, vol. 96(3), pages 461-498, June.
    13. Claudia Goldin & Robert A. Margo, 1992. "The Great Compression: The Wage Structure in the United States at Mid-Century," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 1-34.
    14. Gueorgui Kambourov & Iourii Manovskii, 2009. "Occupational Mobility and Wage Inequality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(2), pages 731-759.
    15. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    16. Huw Lloyd-Ellis, 1999. "Endogenous Technological Change and Wage Inequality," American Economic Review, American Economic Association, vol. 89(1), pages 47-77, March.
    17. Heckman, James J & Sedlacek, Guilherme, 1985. "Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-selection in the Labor Market," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1077-1125, December.
    18. David Orr, 1999. "Book," Journal of Industrial Ecology, Yale University, vol. 3(4), pages 155-156, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sam Jones & Ricardo Santos & Gimelgo Xirinda, 2020. "Misinformed, mismatched, or misled?: Explaining the gap between expected and realized graduate earnings in Mozambique," WIDER Working Paper Series wp-2020-47, World Institute for Development Economic Research (UNU-WIDER).
    2. Piriu, Andreea Alexandra, 2021. "Trade Shocks, Job Insecurity and Individual Health," GLO Discussion Paper Series 992, Global Labor Organization (GLO).
    3. Guy Tchuente, 2016. "High School Human Capital Portfolio and College Outcomes," Journal of Human Capital, University of Chicago Press, vol. 10(3), pages 267-302.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Verdugo, Gregory, 2014. "The great compression of the French wage structure, 1969–2008," Labour Economics, Elsevier, vol. 28(C), pages 131-144.
    2. Dirk Antonczyk & Thomas DeLeire & Bernd Fitzenberger, 2018. "Polarization and Rising Wage Inequality: Comparing the U.S. and Germany," Econometrics, MDPI, vol. 6(2), pages 1-33, April.
    3. Raymundo M. Campos-Vázquez, 2013. "Why did wage inequality decrease in Mexico after NAFTA?," Economía Mexicana NUEVA ÉPOCA, CIDE, División de Economía, vol. 0(2), pages 245-278, July-Dece.
    4. Rebekka Christopoulou & Theodora Kosma, 2009. "Skills and Wage Inequality in Greece: Evidence from Matched Employer-Employee Data, 1995-2002," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 26, Hellenic Observatory, LSE.
    5. Fredrik Andersson & Elizabeth E. Davis & Matthew L. Freedman & Julia I. Lane & Brian P. Mccall & Kristin Sandusky, 2012. "Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 51(4), pages 779-810, October.
    6. Mocan Naci & Unel Bulent, 2017. "Skill-Biased Technological Change, Earnings of Unskilled Workers, and Crime," Review of Law & Economics, De Gruyter, vol. 13(3), pages 1-46, November.
    7. Hornstein, Andreas & Krusell, Per & Violante, Giovanni L., 2005. "The Effects of Technical Change on Labor Market Inequalities," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 20, pages 1275-1370, Elsevier.
    8. Keane, Michael P. & Todd, Petra E. & Wolpin, Kenneth I., 2011. "The Structural Estimation of Behavioral Models: Discrete Choice Dynamic Programming Methods and Applications," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 4, pages 331-461, Elsevier.
    9. Stephen Machin & John Van Reenen, 2007. "Changes in Wage Inequality," CEP Reports 18, Centre for Economic Performance, LSE.
    10. Claudia Goldin & Lawrence F. Katz, 2007. "Long-Run Changes in the Wage Structure: Narrowing, Widening, Polarizing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 38(2), pages 135-168.
    11. Derek Neal & Sherwin Rosen, 1998. "Theories of the Distribution of Labor Earnings," NBER Working Papers 6378, National Bureau of Economic Research, Inc.
    12. Patrick Bayer & Kerwin Kofi Charles, 2016. "Divergent Paths: Structural Change, Economic Rank, and the Evolution of Black-White Earnings Differences, 1940-2014," NBER Working Papers 22797, National Bureau of Economic Research, Inc.
    13. Ariel Burstein & Eduardo Morales & Jonathan Vogel, 2015. "Accounting for Changes in Between-Group Inequality," NBER Working Papers 20855, National Bureau of Economic Research, Inc.
    14. Rongsheng Tang & Yang Tang & Ping Wang, 2020. "Within-Job Wage Inequality: Performance Pay and Job Relatedness," NBER Working Papers 27390, National Bureau of Economic Research, Inc.
    15. Titan Alon, 2018. "Earning More by Doing Less: Human Capital Specialization and the College Wage Premium," 2018 Meeting Papers 497, Society for Economic Dynamics.
    16. repec:pri:cepsud:113krusell is not listed on IDEAS
    17. Rebekka Christopoulou & Theodora Kosma, 2009. "Skills and Wage Inequality in Greece: Evidence from Matched Employer-Employee Data, 1995-2002," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 26, Hellenic Observatory, LSE.
    18. Salverda, Wiemer & Checchi, Daniele, 2014. "Labour-Market Institutions and the Dispersion of Wage Earnings," IZA Discussion Papers 8220, Institute of Labor Economics (IZA).
    19. Hornstein, Andreas & Krusell, Per & Violante, Giovanni L., 2005. "The Effects of Technical Change on Labor Market Inequalities," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 20, pages 1275-1370, Elsevier.
    20. Ismaël Mourifié & Marc Henry & Romuald Méango, 2020. "Sharp Bounds and Testability of a Roy Model of STEM Major Choices," Journal of Political Economy, University of Chicago Press, vol. 128(8), pages 3220-3283.
    21. Matteo Iacoviello, 2008. "Household Debt and Income Inequality, 1963–2003," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(5), pages 929-965, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jhucap:v:4:y:2010:i:1:p:35-61. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JHC .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.