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Math matters: education choices and wage inequality


Rendall, Andrew; Rendall, Michelle (2014). Math matters: education choices and wage inequality. Working paper series / Department of Economics 160, University of Zurich.

Abstract

SBTC is a powerful mechanism in explaining the increasing gap between educated and uneducated wages. However, SBTC cannot mimic the US within-group wage inequality. This paper provides an explanation for the observed intra-college group inequality by showing that the top decile earners' significant wage growth is underpinned by the link between ex ante ability, math-heavy college majors and highly quantitative occupations. We develop a general equilibrium model with multiple education outcomes, where wages are driven by individuals' ex ante abilities and acquired math skills. A large portion of within-group and general wage inequality is explained by math-biased technical change (MBTC).

SBTC is a powerful mechanism in explaining the increasing gap between educated and uneducated wages. However, SBTC cannot mimic the US within-group wage inequality. This paper provides an explanation for the observed intra-college group inequality by showing that the top decile earners' significant wage growth is underpinned by the link between ex ante ability, math-heavy college majors and highly quantitative occupations. We develop a general equilibrium model with multiple education outcomes, where wages are driven by individuals' ex ante abilities and acquired math skills. A large portion of within-group and general wage inequality is explained by math-biased technical change (MBTC).

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:E20, E24, E25, I20, I24, J24, J31
Uncontrolled Keywords:Wage inequality, SBTC, college majors, occupations, mathematics abilities
Language:English
Date:May 2014
Deposited On:04 Jun 2014 12:29
Last Modified:05 Apr 2016 17:54
Series Name:Working paper series / Department of Economics
Number of Pages:43
ISSN:1664-7041
Official URL:http://www.econ.uzh.ch/static/wp/econwp160.pdf
Related URLs:http://www.econ.uzh.ch/static/workingpapers.php
Permanent URL: https://doi.org/10.5167/uzh-96342

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