Year: 2013
Type: book
Abstract: Over the last two decades, earnings in the United States increased at the top and at the bottom of the wage distribution but not in the middle—the intensely debated middle class squeeze. At the same time there was a substantial decline of employment in middle-skill production and clerical occupations—so-called job polarization. I study whether job polarization has caused the middle class squeeze. So far little evidence exists about this because the endogenous selection of skills into occupations prevents credible identification of polarization’s effect on wages. I solve the selection-bias problem by studying the changes in returns to occupation-specific skills instead of the changes in occupational wages using data over the two cohorts of the National Longitudinal Study of Youth (NLSY). This data features multidimensional and pre-determined test scores, which predict occupational sorting and thus measure relative occupation-specific skills. My estimation equations are derived from the Roy (1951) model over two cross-sections with job polarization amounting to a shift in the occupation-specific skill prices. In line with polarization, I find that a one percentage point higher propensity to enter high- (low-) as opposed to middleskill
Author: Michael J. Boehm
Institution: London School of Economics and Political Science
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1501444023