Daily Archives: 26/11/2016

Interpreting the Evidence: Demand Pull or Supply Push?

I now present empirical evidence that seeks to determine whether relative demand or relative supply shifts, or a combination of the two, drive changes in the geographical location of different skill groups. The analysis above suggests that the demand pull and the supply push hypotheses have similar predictions for equilibrium housing costs. Under both hypotheses, cities that experience large increases in the share of college graduates should also experience large increases in housing costs. But the demand pull and supply push hypotheses have different predictions for wage changes. Under the demand pull hypothesis, cities that experience large increases in the share of college graduates should experience large increases in the equilibrium relative wage of college graduates. By contrast, under the supply push hypothesis, there should be no positive….

Changes in the geographical location of different skill groups

Real Wage Inequality† By Enrico Moretti* 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 cityspecific 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) One of the most important developments in the US labor market….

Developments in the US labor market

Real Wage Inequality† By Enrico Moretti* 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 cityspecific 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) One of the most important developments in the US labor market….