Comparative Advantage, Learning, and Sectoral Wage Determination

By Robert Gibbons, Lawrence F. Katz, Thomas Lemieux, Daniel Parent. Journal of Labor Economics, 2005

311 citations recorded by the source corpus.

We develop a model in which a worker’s skills determine the worker’s current wage and sector. The market and the worker are initially uncertain about some of the worker’s skills. Endogenous wage changes and sector mobility occur as labor market participants learn about these unobserved skills. We show how the model can be estimated using nonlinear instrumental variables techniques. We apply our methodology to study wages and allocation of workers across occupations and industries using individual‐level panel data from the National Longitudinal Survey of Youth. We find that high‐wage sectors employ high‐skill workers and offer high returns to workers’ skills.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/2c65e1e4470894154f3b68792e0393c80d911b46

Citations in the corpus

• Asymmetric Information between Employers (2013, unknown): “However, evidence suggests that workers often move to better opportunities and experience wage growth upon doing so (Topel and Ward 1992), or learn about their own abilities and sort into better matches over time (Gibbons et al. 2005).”
• Imperfect Competition, Compensating Differentials and Rent Sharing in the U.S. Labor Market (2019, unknown): “…reflect that some of the productivity differences across firms spill over to wages, it could also be driven by changes in the degree to which workers of different quality sort into different firms (see e.g. Murphy and Topel, 1990; Gibbons and Katz, 1992; Abowd et al., 1999; Gibbons et al., 2005).”
• The Short- and Long-Term Career Effects of Graduating in a Recession (2012, unknown): “This would be in line with career development models such as those presented by Topel and Ward (1992) and Gibbons et al. (2005). However, other models, based on human capital accumulation, job assignment, or persistent wage contracts suggest that recovery may occur within firms, and hence that obtai”
• Firms and Labor Market Inequality: Evidence and Some Theory (2018, unknown): “Yet it has proven di cult to convincingly distinguish industry wage premia from subtle forms of dynamic sorting (Murphy and Topel, 1990; Gibbons and Katz, 1992; Gibbons et al., 2005).”
• Career Choice and Wage Growth (2011, unknown): “3 See Miller (1984), McCall (1990), Neal (1999), and Gibbons et al. (2005) for job-mobility implications and Neal (1995), Parent (2000), Kambourov and Manovskii (2009), and Gathmann and Schoenberg (2010) for wage-growth implications.”
• The Growing Importance of Social Skills in the Labor Market (2017, unknown): “6A related literature studies job assignment when workers have multiple skills (Heckman and Sedlacek 1985, Heckman and Scheinkman 1987, Gibbons et al. 2005, Lazear 2009, Sanders and Taber 2012, Yamaguchi 2012, Lindenlaub 2013, Lise and Postel-Vinay 2015). Models of this type would treat social skill”
• Multidimensional Skill Mismatch (2020, unknown): “…effects of mismatch are consistent with the human capital accumulation channel captured by our model but would be missed by theories where match quality 4 Among many examples, see for example Farber and Gibbons (1996), Gibbons et al. (2005), Antonovics and Golan (2012), and Papageorgiou (2014).”
• Workplace Heterogeneity and the Rise of West German Wage Inequality (2013, unknown): “For example, in learning models with comparative advantage (e.g., Gibbons et al., 2005) some components of worker ability are revealed slowly over time, and these components are valued differently at different establishments.34 Under such a scenario, workers who turn out to be more productive than…”
• Height, Skills, and Labor Market Outcomes in Mexico (2014, unknown): “With adequate panel data and structual assumptions, one can recover within-occupation skill returns (see, e.g., Gibbons et al. 2005).”
• Occupational Tasks and Changes in the Wage Structure (2011, unknown): “6See, for instance, Heckman and Scheinkman (1987) and Gibbons et al. (2005) for evidence of occupational wage differences among workers with similar observed and unobserved productive characteristics.”
• Skill Transferability, Migration, and Development: Evidence from Population Resettlement in Indonesia (2016, unknown): “(3)Recent studies are found in labor (Bayer et al., 2011; Dahl, 2002; Gibbons et al., 2005), spatial and urban (Combes et al.”
• Putting Tasks to the Test: Human Capital, Job Tasks, and Wages (2013, unknown): “Lazear ð2009Þ provides a general theoretical statement of this problem, while Neal ð1999Þ, Gibbons et al. ð2005Þ, and Gathmann and Schönberg ð2010Þ develop and test detailed empirical implications.”
• Matching and Inequality in the World Economy (2010, unknown): “2 See Gibbons et al. (2005) for empirical evidence demonstrating the importance of comparative advantage for the allocation of workers across industries and occupations. into the analysis of a matching problem and in turn to generate both sharp and intuitive predictions in economies with many goods…”
• How General Is Human Capital? A Task‐Based Approach (2010, unknown): “While many studies have estimated the contribution of firm-specific human capital to individual wage growth (Abraham and Farber 1987; Altonji and Shakotko 1987; Kletzer 1989; Topel 1991; Altonji and Williams 2005), recent evidence suggests that specific skills might be more tied to an occupation tha”
• Where Have the Middle-Wage Workers Gone? A Study of Polarization Using Panel Data (2016, unknown): “The paper begins by describing a model that features an occupational sorting mechanism that follows Gibbons et al. ð2005Þ: workers select into occupations based on their comparative advantage.”