Occupational Choice and the E¤ects of Skill Supply on Relative Wages
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.
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- Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-880, June.
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- 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.
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- 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.
- 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)
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