Macro Seminars Amsterdam

Speaker(s)
Michelle Rendall (University of Zurich, Switzerland)
Date
Friday, 6 November 2015
Location
Amsterdam

Standard SBTC is a powerful mechanism in explaining the increasing wage gap between educated and uneducated individuals. However, SBTC cannot explain withingroup wage inequality in the US. This paper provides an explanation for the observed intra-college group inequality by showing that the top decile earners’ significant wage growth is underpinned by the link between ex ante ability, math-heavy college majors and highly quantitative occupations. We develop a general equilibrium model with multiple education outcomes, where wages are driven by individuals’ ex ante abilities and acquired math skills. A large portion of within-group and general wage inequality is explained by math-biased technical change (MBTC). Joint with Andrew Rendall.