In our model the skilled workers (e.g. managers) can be employed by the established (Chandlerian) firms or they can set-up their own firm. We obtain two equilibria where either the entrepreneurial sector does not arise or most of the skilled workers found their own firms. The Chandlerian equilibrium exhibits lower inequality in earnings between skills and more diversified large companies. Lower...

In today’s knowledge-based economy and fast growing world, it is the countries with workforces that are creative, adaptable, and skillful that will gain competitive advantage; therefore countries worldwide are designing and implementing policies to attract “the best and brightest” talents that are essential to their success. Highly skilled immigrants or foreign workers have made significant con...

This paper uses matched employee-employer data from the UK that we augment with information on R&D expenditures, to analyze the relationship between innovativeness and average wage income across firms. We first show that more R&D intensive firms pay higher wages on average. Our second finding is that the premium to working in more R&D intensive firms seems to be higher for low-skilled workers t...

This study investigates the extent of labour market competition among native Dutch workers and ethnic minorities, using national survey of the SEO and the Population statistics of the CBS. Firstly, the direct e¤ect of immigrants on local labour markets is considered. It is shown that ethnic minorities from developing countries have a positive e¤ect on the earnings of high skilled natives and an...

In the past three decades, American central city neighborhoods have experienced an influx of high-income, highly skilled residents and an exodus of low-income, low-skilled residents. This gentrification of central city neighborhoods has reversed decades of decline in urban centers. In this paper, I test the hypothesis that an important driving force behind gentrification is the rise in the valu...

In our general equilibrium model, the variety of specialized service links affects international production fragmentation in manufacturing. Decreases in cost of education or fixed cost of service links raise the relative supply of skilled workers, increase service specialization, and decrease the price of aggregate services. Consequently, the market for serviceand skill-intensive component manu...

In both the U.S. and the OECD, highand low-paying occupations expanded relative to middle-wage occupations during the 1990s and 2000s. We explore changes in the age structure of occupations as a means to analyze the reallocation of workers from middleskill occupations towards the tails of the distribution. We posit that occupations typically expand by hiring young workers and contract by curtai...

This paper demonstrates that low-skilled Mexican-born immigrants' location choices in the U.S. respond strongly to changes in local labor demand, and that this geographic elasticity helps equalize spatial differences in labor market outcomes for low-skilled native workers, who are much less responsive. We leverage the substantial geographic variation in employment losses that occurred during Gr...

This paper investigates the effects of services offshoring on wages using individual level data combined with industry information on offshoring. Our results show that services offshoring affects the real wage of low and medium skilled individuals negatively. By contrast, skilled workers benefit from services offshoring in terms of higher real wages. Hence, offshoring has contributed to a widen...

This paper integrates the insight that exporting firms are typically more productive and employ higher skilled workers into a directed search model of the labor market. The model generates a skill premium as well as residual wage inequality among identical workers. A trade liberalization will cause a reallocation of workers both within and across industries. The within industry reallocation inc...