A Multisector Perspective on Wage Stagnation

Arbeitspapier

Low-skilled workers are concentrated in sectors that experience fast productivity growth and yet their real wages have been stagnating. We document evidence from the U.S. to show the importance of sectoral reallocations. Key to our two-sector model is the fall in the relative price of the low-skill intensive sector caused by faster productivity growth. When outputs are complements across sectors, this leads to a reallocation of low-skilled workers to the high-skill intensive sector where their marginal product is stagnant. We show that this mechanism is quantitatively important for the stagnation of low-skill real wages and their divergence from aggregate labor productivity during 1980-2010.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 16356

Classification and Topics

• Classification: Wirtschaft ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Labor Demand ; Wage Level and Structure; Wage Differentials
• Subject: wage stagnation ; wage-productivity divergence ; low-skill wage ; multisector model

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ngai, L. Rachel ; Sevinc, Orhun
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/279054
• Last update: 10.03.2025, 11:43 AM CET