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Between-Group Competition In The Labour Market And The Rising Returns To Skill: US And France 1964-2000

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  • Wasmer, Etienne
Abstract
This Paper describes the changes in the composition of the labour force in the last 35 years and quantifies the substitution of low education / high experience workers by low experience / high education workers by using US and French microdata. The consequences of this substitution on the wage structure are then investigated. In the US, labour supply changes can explain the changes in returns to experience. It also accounts for a part of the increase in returns to education between 1980 and 2000, between 8% and 20% depending on the specification. These results rely on panel estimates of a useful concept: the elasticity of substitution between experience and education, which is found to be less than half. In France, the covariations of prices and the supply of skills are consistent with a pure labour supply explanation. Methodologically, the Paper shows that the use of a stock measure of efficient units of skills is better than flow measures (e.g. cohort size). It also allows analysis of the consequences of rising female labour participation.

Suggested Citation

  • Wasmer, Etienne, 2001. "Between-Group Competition In The Labour Market And The Rising Returns To Skill: US And France 1964-2000," CEPR Discussion Papers 2798, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2798
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    References listed on IDEAS

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    Cited by:

    1. Verdugo, Gregory, 2014. "The great compression of the French wage structure, 1969–2008," Labour Economics, Elsevier, vol. 28(C), pages 131-144.
    2. Josep Pijoan-Mas & Virginia Sanchez-Marcos, 2010. "Spain is Different: Falling Trends of Inequality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 154-178, January.
    3. Susan Johnson & Peter Kuhn, 2004. "Increasing Male Earnings Inequality in Canada and the United States, 1981­1997: The Role of Hours Changes versus Wage Changes," Canadian Public Policy, University of Toronto Press, vol. 30(2), pages 155-176, June.
    4. Marcel Mérette, 2007. "Substitution between Young and Old Workers in an Ageing Context," EcoMod2007 23900057, EcoMod.

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    More about this item

    Keywords

    Wage inequality; Education; Experience; Labour supply;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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