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Title: Growing Apart: Tradable Services and the Fragmentation of the U.S. Economy

Citation Type: Miscellaneous

Publication Year: 2019

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Abstract: Between 1980 and 2010, the college wage premium in U.S. labor markets with larger initial shares of high-skill service employment grew substantially faster than the nationwide average. I show how this trend can be explained within the context of a Ricardian model of interregional trade, where a reduction in communication costs magnifies regional specialization in high-skill services, raising the skill premium in service-exporting regions and reducing it in service-importing regions. Quantitatively , I show that the decline in communication costs I infer from sectoral trade imbalances can explain a substantial part of the differential skill premium growth across U.S. labor markets in the data. These regional changes aggregate to account for 30 percent of the rise in the overall U.S. college wage premium between 1980 and 2010.

Url: http://fpeckert.me/eckert_jmp_2018.pdf

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Authors: Eckert, Fabian

Publisher: Yale University

Data Collections: IPUMS USA, IPUMS CPS

Topics: Labor Force and Occupational Structure

Countries: United States