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Title: Has there been a Structural Change in the Labour Market? Evidence from U.S. Cities
Citation Type: Miscellaneous
Publication Year: 2008
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Abstract: This paper begins with the observation that estimates of the impact of cityeducational composition on wages, often interpreted as human capital externalities, are notstable over time. Using U.S. Census data, I nd large, positive spill-overs from collegeeducation in the 1980s, as documented by Moretti (2004). In contrast, in the 1990s, thesupply of skilled workers negatively impacts the wages of low-skill workers. This nding issurprising both in magnitude and direction and, I argue, is not consistent with standardmodels of technological human capital externalities. In order to explain this result, I turnto Acemoglu's (1999) model of endogenous job composition. In this model, the observedpattern of education spill-overs can be rationalized by a structural change in the labourmarket driven either by an increase of in the supply of skilled workers and/or technicalchange. This model also has a rich set of testable implications that I take to the data inthe empirical portion of this paper and nd considerable support for them in a numberof dimensions. Consistent with the notion that there has been a structural change in thelabour market, increases in the supply of skilled labour in the 1990s induce a change in thecomposition of jobs, increase inequality, unemployment, the return to education, and thewages of high-skill workers and harm low-skill workers.
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Authors: Sand, Ben M.
Publisher: University of British Columbia
Data Collections: IPUMS USA
Topics: Labor Force and Occupational Structure
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