This paper studies the implications of a monetary policy shock on the skill premium and unemployment across skills. A dataset on the skill premium and the unemployment ratios of the high and low educated is compiled using the Outgoing Rotation Group of the Current Population Survey. A vector autoregressive analysis demonstrates that a contractionary policy induces a decline in the skill premium...

We build an endogenous growth model with automation (the replacement of low-skill workers machines) and horizontal innovation creation new products). Over time, the share innovations endogenously increases through increase in wages, leading to skill premium a decline labor share. calibrate US economy show that it quantitatively replicates paths premium, share, productivity. Our offers perspecti...

Technological progress allows firms to scale production processes over an increasingly large number of workers. This affects the size of the firm as well as the skill level of its workforce. We propose a unifying theory of production where management resolves a tradeoff between hiring more versus better workers. The span of control or size is therefore intimately intertwined with the sorting pa...

In this study, we analyze the e¤ects of a decrease in unskilled labor in China on the direction of innovation in the US by incorporating production o¤shoring into a North-South model of directed technical change. We …nd that if o¤shoring is present (absent) in equilibrium, then a decrease in unskilled labor in the South would lead to skill-biased (unskill-biased) technical change in the North. ...

In an empirical analysis, considering 236 U.S. cities in the period 1980-1990, we document a strong positive correlation between local supply of education skills and their return. In SMSA’s where the average education of workers is high the education premium is also high. This is true both considering the levels of the variables in 1980, 1990 and considering their changes. Technical progress, a...

The skill premium fell substantially in the first part of the 20th century, and then rose at the end of the century. I argue that these changes are connected to the organization of production. When production is organized into large plants, jobs become routinized, favoring less skilled workers. Building on the notion that numerically controlled machines made capital more “flexible” at the end o...

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...