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Sectoral Shift, Job Mobility and Wage Inequality

Author

Listed:
  • Shouyong Shi

    (University of Toronto)

  • Florian Hoffmann

    (University of British Columbia)

Abstract

In the last few decades there is a clear shift of the U.S. economy from the non-service sector to the service sector. We document the patterns of changes in the employment share in services, the transition rates of workers between the two sectors and between different employment status, the relative wage income between the sectors, and wage inequality. To understand these changes jointly, we construct a dynamic equilibrium model of a two-sector economy where workers search both on the job and in unemployment. Assuming that the value-added per labor has been increasing in services relative to non-services, we estimate the model and make inferences on how the sectoral shift interacts with skill accumulation and labor market frictions.

Suggested Citation

  • Shouyong Shi & Florian Hoffmann, 2014. "Sectoral Shift, Job Mobility and Wage Inequality," 2014 Meeting Papers 123, Society for Economic Dynamics.
    • Handle: RePEc:red:sed014:123
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    References listed on IDEAS

    as
    1. Gueorgui Kambourov, 2009. "Labour Market Regulations and the Sectoral Reallocation of Workers: The Case of Trade Reforms," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(4), pages 1321-1358.
    2. Menzio, Guido & Shi, Shouyong, 2010. "Block recursive equilibria for stochastic models of search on the job," Journal of Economic Theory, Elsevier, vol. 145(4), pages 1453-1494, July.
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    4. Guido Menzio & Shouyong Shi, 2010. "Directed Search on the Job, Heterogeneity, and Aggregate Fluctuations," American Economic Review, American Economic Association, vol. 100(2), pages 327-332, May.
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    6. Francisco M. Gonzalez & Shouyong Shi, 2010. "An Equilibrium Theory of Learning, Search, and Wages," Econometrica, Econometric Society, vol. 78(2), pages 509-537, March.
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    9. Shouyong Shi, 2009. "Directed Search for Equilibrium Wage-Tenure Contracts," Econometrica, Econometric Society, vol. 77(2), pages 561-584, March.
    10. Acemoglu, Daron & Autor, David, 2011. "Skills, Tasks and Technologies: Implications for Employment and Earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 12, pages 1043-1171, Elsevier.
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