Rising Wage Inequality, Comparative Advantage, and the Growing Importance of General Skills in the United States

Eric D. Gould*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

60 Scopus citations

Abstract

This study uses a model of comparative advantage to model the choice of workers into three broad occupations. The pursuit of comparative advantage is shown to reduce the level of inequality from what would occur in a random assignment of workers into occupations. However, after pricing the skills of workers separately within occupations, the results indicate that the sectors are becoming more similar in the way that they value workers' skills, thus reducing the importance of comparative advantage over time. Inequality is rising as the economy is increasingly characterized by the pursuit of absolute advantage rather than comparative advantage.

Original languageAmerican English
Pages (from-to)105-147
Number of pages43
JournalJournal of Labor Economics
Volume20
Issue number1
DOIs
StatePublished - Jan 2002

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