Entry Costs, Task Variety, and Skill Flexibility: A Simple Theory of (Top) Income Skewness

Author:

Atolia Manoj1,Kurokawa Yoshinori2

Affiliation:

1. Department of Economics , Florida State University , Tallahassee , FL 32306, USA

2. Faculty of Humanities and Social Sciences, University of Tsukuba , Tsukuba , Ibaraki 305-8571, Japan

Abstract

Abstract This paper develops a simple model that provides a unified explanation for both an increase in below-top skewness and a much larger increase in within-top skewness of wage income distribution. It relies on a single mechanism based on the fixed costs of firm entry. A decrease in entry costs increases the variety of goods/tasks and thus the demand for higher-skilled workers who are more flexible in handling a variety of tasks, which increases both types of skewness. Differences in flexibility are modeled as differences in the fixed labor setup costs required to handle a given number of tasks. Our numerical experiments in a calibrated model show that a decrease in entry costs – entry deregulation – can be a quantitatively important source of both the increase in below-top skewness and the much larger increase in within-top skewness observed in the U.S. Moreover, the experiments imply that the observed differences in entry deregulation can cause significant differences in the top skewness across countries that have similar technological change. This can provide an answer to Piketty and Saez’s (2006) question: Why have top wages surged in English speaking countries in recent decades but not in continental Europe or Japan, which have gone through similar technological change?

Publisher

Walter de Gruyter GmbH

Subject

Economics and Econometrics

Reference48 articles.

1. Atkinson, A. B., T. Piketty, and E. Saez. 2011. “Top Incomes in the Long Run of History.” Journal of Economic Literature 49 (1): 3–71, https://doi.org/10.1257/jel.49.1.3.

2. Autor, D. H., L. F. Katz, and M. S. Kearney. 2006. “The Polarization of the U.S. Labor Market.” The American Economic Review 96 (2): 189–94, https://doi.org/10.1257/000282806777212620.

3. Bach, S., G. Corneo, and V. Steiner. 2007. “From Bottom to Top: The Entire Distribution of Market Income in Germany, 1992–2001.” IZA Discussion Papers 2723, Institute for the Study of Labor (IZA).

4. Bakija, J., A. Cole, and B. T. Heim. 2012. “Jobs and Income Growth of Top Earners and the Causes of Changing Income Inequality: Evidence from U.S. Tax Return Data.” Working Paper, Williams College.

5. Basu, S. 1995. “Intermediate Goods and Business Cycles: Implications for Productivity and Welfare.” The American Economic Review 85 (3): 512–31.

同舟云学术

1.学者识别学者识别

2.学术分析学术分析

3.人才评估人才评估

"同舟云学术"是以全球学者为主线,采集、加工和组织学术论文而形成的新型学术文献查询和分析系统,可以对全球学者进行文献检索和人才价值评估。用户可以通过关注某些学科领域的顶尖人物而持续追踪该领域的学科进展和研究前沿。经过近期的数据扩容,当前同舟云学术共收录了国内外主流学术期刊6万余种,收集的期刊论文及会议论文总量共计约1.5亿篇,并以每天添加12000余篇中外论文的速度递增。我们也可以为用户提供个性化、定制化的学者数据。欢迎来电咨询!咨询电话:010-8811{复制后删除}0370

www.globalauthorid.com

TOP

Copyright © 2019-2024 北京同舟云网络信息技术有限公司
京公网安备11010802033243号  京ICP备18003416号-3