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Trading up and the skill premium


Jaimovich, Nir; Rebelo, Sergio; Wong, Arlene; Zhang, Miao Ben (2020). Trading up and the skill premium. NBER macroeconomics annual, 34:285-316.

Abstract

We study the impact on the skill premium of increases in the quality of goods consumed by households (“trading up”). Our empirical work shows that high-quality goods are more intensive in skilled labor than low-quality goods and that household spending on high-quality goods rises with income. We propose a model consistent with these facts. This model accounts for the past rise in the skill premium with more plausible rates of skill-biased technical change than those required by the canonical model. It also implies that an expansion of the skilled labor force reduces the skill premium by much less than in the canonical model.

Abstract

We study the impact on the skill premium of increases in the quality of goods consumed by households (“trading up”). Our empirical work shows that high-quality goods are more intensive in skilled labor than low-quality goods and that household spending on high-quality goods rises with income. We propose a model consistent with these facts. This model accounts for the past rise in the skill premium with more plausible rates of skill-biased technical change than those required by the canonical model. It also implies that an expansion of the skilled labor force reduces the skill premium by much less than in the canonical model.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Economics and Econometrics
Uncontrolled Keywords:Economics and econometrics
Scope:Discipline-based scholarship (basic research)
Language:English
Date:March 2020
Deposited On:18 Sep 2020 15:19
Last Modified:24 May 2024 01:39
Publisher:MIT Press
ISSN:0889-3365
Additional Information:Auch publiziert als NBER Working Paper No. 25931, siehe https://www.nber.org/papers/w25931.
OA Status:Closed
Publisher DOI:https://doi.org/10.1086/707185
Related URLs:https://www.zora.uzh.ch/id/eprint/174354/
Other Identification Number:merlin-id:19788
  • Content: Other
  • Language: English
  • Permission: Download for registered users
  • Description: Working Paper version