Caicedo, Santiago, Lucas, Robert E., Jr., Rossi-Hansberg, Esteban, (2016), “Learning, career paths, and the distribution of wages”, Voxeu, 14 May
A large part of people’s wages rewards the knowledge embedded in them that they use in a production endeavour. Knowledgeable individuals specialise in hard, complicated tasks, while less knowledgeable ones specialise in simpler, more common tasks. This column uses a dynamic model of knowledge accumulation over time and career paths to find an underlying cause for wage inequality in the US over the last few decades. A good explanation for the wage inequality is the discrepancy between the rate of technological change and the rate at which the distribution of knowledge catches up.
Relevant Posts
- Stirati, Antonella, (2016), “Real wages in the business cycle and the theory of income distribution: an unresolved conflict between theory and facts in mainstream macroeconomics”, Oxford University Press, Cambridge Journal of Economics, Issue 2, Volume 40, pp. 639-661, March
- McGuinness, Seamus, Pouliakas, Konstantinos, (2016), “Deconstructing Theories of Overeducation in Europe: A Wage Decomposition Approach “, IZA DP No. 9698, February