Successive Technical Change and the Demand for Skill

Skill-Biased Technical Change is one of the most prominent explanations for the rise in wage inequality in the United States over the last decades. However, the explanation is challenged for several reasons. In this paper, I propose an alternative type of technical change, where new technologies are initially adopted only by a fraction of firms (henceforth referred to as Successive Technical Change). I show that the implications of Successive Technical Change - in a heterogeneous firms model with search frictions - are in line with a broad set of stylized facts I derive from the Current Population Survey and the Economic Census of the United States. In particular, the model is consistent with the polarization of within-group wage distributions and the revenue distribution, the rise in the skill premium, and the increase of the firm size wage premium of college-graduates relative to the one of non-college-graduates. Perhaps the most interesting prediction of the model is that - depending on the state of the economy - a policy that fosters technology adoption at small and medium sized firms may decrease inequality

Workplace Heterogeneity and the Returns to Versatility

In the present paper, I develop an on-the-job search model in which workers face both frictional and structural impediments to sorting. There are two key model predictions. First, versatility enhances the worker’s ability to sort into the most productive firms since a mismatch between the job requirements and the worker’s skill set is less likely to occur. Second, the larger the productivity differentials between the firms, the larger the returns to sorting and, hence, versatility. I test the latter hypothesis by exploiting industry variation in sales-per-worker dispersion across employers in the United States in 2007. An increase in the sales-per-worker standard deviation by ten log-points is, indeed, estimated to raise the above-median versatile worker’s relative wage by 11 to 21 log-points. I also provide supportive evidence from Germany

Was wir aus dem Sparverhalten der Ostdeutschen lernen können : die deutsche Wiedervereinigung als »natürliches Experiment«

Wirtschaftliche Umbrüche, wie sie mit der deutschen Wiedervereinigung verbunden waren, sind in industrialisierten Ländern selten. Sie bieten deshalb aus wissenschaftlicher Sicht eine wertvolle Gelegenheit, um Erkenntnisse über das ökonomische Verhalten von Menschen zu gewinnen. Das Sparverhalten der Ostdeutschen nach der deutschen Wiedervereinigung bestätigt, dass Menschen ihre Ersparnis rational planen

Job Mobility and Sorting: Theory and Evidence

I derive a measure of job mobility that reflects individuals ability to sort into the preferred jobs. Relying on the Survey of Income and Program Participation, I find that educational attainment tends to have a strong positive effect on internal (i.e., within firms) and external (i.e., between firms) job mobility. General experience and occupation-specific human capital have only a limited effect on both internal and external mobility. The impact of being versatile on an individual s external job mobility is substantial and similar in magnitude as the effect of a college degree on a high school dropout s external mobility

A cross-country study of skills and unemployment flows

Using an international survey that directly assesses the cognitive skills of the adult population, I study the relation between skills and unemployment flows across 37 countries. Depending on the specifically assessed domain, I document that skills have an unconditional correlation with the log-risk-ratio of exiting to entering unemployment of 0.65–0.68 across the advanced and skill-abundant countries in the sample. The relation is remarkably robust and it is unlikely to be due to reverse causality. I do not find evidence that this positive relation extends to the seven relatively less advanced and less skill-abundant countries in the sample: Peru, Ecuador, Indonesia, Mexico, Chile, Turkey and Kazakhstan

Trends and cycles in U.S. job mobility

Recent studies document a decline in U.S. labor-market fluidity from as early as the 1970s on. Making use of the Annual Social and Economic supplement to the Current Population Survey, I uncover a pronounced increase in job-to-job mobility from the 1970s to the 1990s, i.e. the annual share of continuously employed job-to-job movers rises from 5.9% of the labor force in 1975–1979 to 8.8% in 1995–1999. Job-to-job mobility exhibits a downward trend only since the turn of the millennium. In order to provide a formal economic interpretation, I additionally estimate the parameters of the random on-the-job search model. Furthermore, I document that job-to-job mobility has an unconditional correlation of −0.86 with the unemployment rate at business-cycle frequencies in 1975–2017, varying by around 3 percentage points over the business cycle