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American Economic Journal: Applied Economics: Vol. 5 No. 1 (January 2013)

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Real Wage Inequality

Article Citation

Moretti, Enrico. 2013. "Real Wage Inequality." American Economic Journal: Applied Economics, 5(1): 65-103.

DOI: 10.1257/app.5.1.65

Abstract

While nominal wage differences between skilled and unskilled workers have increased since 1980, college graduates have experienced larger increases in cost of living because they have increasingly concentrated in cities with high cost of housing. Using a city-specific CPI, I find that real wage differences between college and high school graduates have grown significantly less than nominal differences. Changes in the geographical location of different skill groups are to a significant degree driven by city-specific shifts in relative demand. I conclude that the increase in utility differences between skilled and unskilled workers since 1980 is smaller than previously thought based on nominal wage differences. (JEL J22, J23, J24, J31, R23, R31)

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Authors

Moretti, Enrico (U CA, Berkeley)

JEL Classifications

J22: Time Allocation and Labor Supply
J23: Labor Demand
J24: Human Capital; Skills; Occupational Choice; Labor Productivity
J31: Wage Level and Structure; Wage Differentials
R23: Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
R31: Housing Supply and Markets

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