Abstract
AbstractWe document that U.S. employment polarization in the 1980–2017 period is largely generated by women. In addition, we provide evidence that the increase of employment shares at the bottom of the skill distribution is generated in market sectors producing services representing home production substitutes. We use a calibrated macroeconomic model to show that a rising skill premium induces high‐skilled women to participate more in the labor market, reduce home working hours, and demand more home substitutes in the market, thus fostering a rise in employment shares at the bottom of the skill distribution. Counterfactual experiments suggest that without the large increase in the skill premium of high‐skilled women, employment polarization would have been substantially reduced, and changes of employment shares at the bottom of the distribution would have been negative.
Highlights
The U.S labor market experienced a sharp increase in the wage premium of more educated agents since 1980 (Katz and Murphy, 1992 Autor, Katz, and Kearney, 2008)
In Subsection 6.2 we compare the changes of employment shares along the skill distribution generated by the model with those in the data, and assess the capability of the model in generating employment polarization by gender and sector
We devote this section to present three sets of counterfactual exercises that allow us to disentangle the sources of employment polarization in the model: the first focuses on the role of technology, the second on the skill premium by gender and education, while the third presents an out-of-sample analysis for the period 1960-1980
Summary
The U.S labor market experienced a sharp increase in the wage premium of more educated agents since 1980 (Katz and Murphy, 1992 Autor, Katz, and Kearney, 2008). As SBTC affects both educated males and females, we run a counterfactual in which we tax wages of educated women by 36% in the 2017 equilibrium, i.e. roughly the increse in wages experienced by this group between 1980 to 2017 in the data In this case, the increase of employment shares at the bottom and at the top of the skill distribution between the two equilibria is substantially reduced with respect to the benchmark case, confirming that the wageinduced higher participation of educated woman in the labor market is a key driver of employment polarization.
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