Rui Luo, 14 May 2017

While the impact of modern technological change on the skill premium has been well explained, there has been no study of the evolution of the skill premium over the very long run. This column reveals that the skill premium in Western Europe declined between 1300 and 1600, and converged to a low and stable level afterwards. Growth and technological change, while stimulating economic development and the transition from a pre-modern era to modern era, reduced wage inequality between different working groups.

Juan Carluccio, Alejandro Cuñat, Harald Fadinger, Christian Fons-Rosen, 14 December 2015

The increase in the skill premium – wages of skilled workers relative to unskilled workers – has prompted research on its causes and potential remedies. This column presents new evidence suggesting that the impact of globalisation on the income distribution in industrialised countries is much stronger than initially thought. The productivity gains from having access to cheaper inputs through offshoring are not being distributed equally between the different economic actors in our rich societies.

Holger Mueller, Paige Ouimet, Elena Simintzi, 12 March 2015

Rising wage inequality has received attention from academics and policymakers alike. This column describes new evidence for determinants of the ‘skill premium’, i.e., the wage difference between high and low-skilled workers. The findings indicate that skill premia are larger at larger firms. At the same time, larger firms have grown substantially. Therefore, the growth of larger firms in the economy could partially explain the growing wage inequality. 

Dalia Marin, 15 November 2014

Recent advances in artificial intelligence could affect manufacturing and the labour markets in a number of ways. This column explores two of them. First, it finds no confirmation that machines have decreased the cost of labour and brought manufacturing back to rich countries. Second, it argues that machines could replace highly skilled workers rather than increase the demand for their labour. Technology and skills are thus substitutes not complements.

Alex Bryson, Bernd Frick, Rob Simmons, 07 December 2009

The study of sports is beginning to tell us more and more about the operation of labour markets and incentives. This column looks at football to verify that wages reflect marginal productivity. It shows that two-footedness – the rare ability to use both feet to pass, tackle, and shoot – commands a large wage premium.

Paolo Epifani, Gino Gancia, 07 October 2008

Wage inequality between skilled and unskilled workers has increased in recent years, particularly in countries that opened their markets to international trade. This column explains how trade may push up the demand for skilled workers worldwide by creating larger international markets for differentiated goods.

Joseph Altonji, Prashant Bharadwaj, Fabian Lange, 06 May 2008

The earnings premium for skilled labour has increased dramatically in recent decades. Yet, as this column shows, Americans are not acquiring significantly greater skills in response to this change. The resulting gap will increase US income inequality in the coming decades.