Wage inequality and segregation by skill

78 Pages·1996·1.5 MB·English

by  Kremer, Michael, 1964-

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\NAGEINEQUAtmrAND SEGREGATIONBYSKILL
Michael Kremer
Eric Maskin
96-23 Aug. 1996
massachusetts
institute of
technology
50 memorial drive
Cambridge, mass. 02139
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WAGEINEQUALHYAND SEGREGATIONBYSKILL
Michael Kremer
Eric Maskin
96-23 Aug. 1996
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Wage Inequality and Segregation by Skill'
Michael Kremer and Eric Maskin
August 2, 1996
Abstract
Evidence from the United States, Britain, and France suggests that recent growth in wage
inequality has been accompanied by greater segregation of high- and low-skill workers into
A
separate firms. model in which workers of different skill-levels are imperfect substitutes
can simultaneously account for these increases in segregation and inequality either through
technological change, or, more parsimoniously, through observed changes in the skill-
distribution.
'We thank Daron Acemoglu, V.V. Chari, Benjamin Friedman, Lawrence Katz, Thomas Piketty, Sherwin
Rosen, Kenneth Troske, and Finis Welch for suggestions; Andrew Bernard, Eli Berman, Steve Davis, Brad
Jensen, Francis Kramarz, Steve Machin, and Ken Troske for suggestions and data; and Sergei Severinov and
Charles Morcom for exceptionally helpful research assistance. We are grateful to the Center for Economic
Studies, U.S. Bureau of the Census, for providing data. We acknowledge research support from the National
Science Foundation. All opinions, as well as mistakes, are our own, and not those of the U.S. Bureau ofthe
Census.
'M.I.T., National Bureau ofEconomic Research, and Harvard Institute for International Development.
"Harvard University.