Full Citation
Title: Income-Driven Labor-Market Polarization
Citation Type: Miscellaneous
Publication Year: 2019
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Abstract: We document that income elastic-sectors are more intensive in high- and low-skill occupations than income inelastic sectors, which are relatively more middle-skill intensive. As a result, increases in aggregate expenditure have an asymmetric effect on labor demand across occupations and cause labor-market polarization. We quantify the importance of this demand-driven labor market polarization for the US using a general equilibrium model with nonhomothetic demand and endogenous job assignment. Our model is calibrated to match aggregate variables in 1980 and household-level estimates of sectoral income elasticities. We fnd that the increase in aggregate expenditure from 1980 to 2016 accounts for 50% of the increase in the wage bill share of high-skill occupations, 60% of the decline for medium-skill occupations and virtually all of the increase in the wage bill share of low-skill occupations. This mechanism is also quantiatively important to understand the evolution of labor market outcomes across occupations in the period 1950-1980 and in other developed economies.
Url: https://pdfs.semanticscholar.org/95e1/04cf3592ef3cbacbb754edf7a7d08bbf347f.pdf
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Authors: Comin, Diego; Danieli, Ana; Mestieri, MartÃ
Publisher: Dartmouth College
Data Collections: IPUMS USA
Topics: Labor Force and Occupational Structure, Other
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