Skilled Tradable Services: The Transformation of U.S. High-Skill Labor Markets
52 Pages Posted: 23 Aug 2019
Date Written: August 18, 2019
We study a group of service industries that is skill-intensive, widely traded, and has recently seen explosive wage growth. Between 1980 and 2015, these "Skilled Tradable Services" accounted for a sharply increasing share of employment among the highest-earning Americans. Unlike any other sector, their wage growth was strongly biased towards the densest local labor markets and the highest paying firms. These services alone explain 30% of the increase in inequality between the 50th and 90th percentiles of the wage distribution. We offer an explanation for these patterns that highlights the complementarity between the non-rivalry of knowledge and changes in communication costs.
Keywords: Wage Inequality, Skill Biased, Technological Change, Urban Growth, Trade and Geography
JEL Classification: J31, O33, R11, R12
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