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Occupational Choice and the E¤ects of Skill Supply on Relative Wages

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  • Gregory Kurtzon

    () (U.S. Bureau of Labor Statistics)

Abstract

It is shown that an economy where agents with one dimensional skill choose among occupations as intermediate complementary inputs with di¤erent learning costs has an equilibrium hierarchy from the lowest cost/skill/wage occupations to the highest which agents will cascade along away from the skill level of new entrants. This can explain why di¤erently/similarly skilled agents act like comple- ments/substitutes. The distinction between lifetime wages including the learning cost and current wages implies a more elastic e¤ect of immigration, but a more inelastic e¤ect of the minimum wage. These conclusions don?t rely on the typical assumptions of scale, preferences, or comparative advantage.

Suggested Citation

  • Gregory Kurtzon, 2013. "Occupational Choice and the E¤ects of Skill Supply on Relative Wages," Working Papers 460, U.S. Bureau of Labor Statistics.
  • Handle: RePEc:bls:wpaper:ec130050
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    References listed on IDEAS

    as
    1. Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-880, June.
    2. Robert M. Costrell & Glenn C. Loury, 2004. "Distribution of Ability and Earnings in a Hierarchical Job Assignment Model," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1322-1363, December.
    3. Edward M. Gramlich, 1976. "Impact of Minimum Wages on Other Wages, Employment, and Family Incomes," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(2), pages 409-462.
    4. Brown, Charles, 1999. "Minimum wages, employment, and the distribution of income," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 32, pages 2101-2163 Elsevier.
    5. Rachel M. Friedberg & Jennifer Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 23-44, Spring.
    6. Coen N. Teulings, 2005. "Comparative Advantage, Relative Wages, and the Accumulation of Human Capital," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 425-461, April.
    7. Coen N. Teulings, 2002. "Comparative Advantage, Relative Wages, and the Accumulation of Human Capital," Tinbergen Institute Discussion Papers 02-081/3, Tinbergen Institute, revised 08 Apr 2005.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Occupation; Occupational Choice; Skill; Occupational Training; Occupational Wage Differential; Wage Distriubtion; Relative Wages; Labor Complementarity;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

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