Skills, Degrees and Labor Market Inequality. Working Paper 28991

Over the past four decades, income inequality grew significantly between workers with bachelor's degrees and those with high school diplomas (often called "unskilled"). Rather than being unskilled, we argue that these workers are STARs because they are skilled through alternative rout...

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Bibliographic Details
Published inNational Bureau of Economic Research
Main Authors Blair, Peter Q, Debroy, Papia, Heck, Justin
Format Report
LanguageEnglish
Published National Bureau of Economic Research 01.07.2021
Subjects
Bachelors Degrees
Employment Potential
Human Capital
Income
Job Skills
Labor Market
On the Job Training
Skilled Workers
Transfer of Training
Unskilled Workers
Work Experience
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Summary:Over the past four decades, income inequality grew significantly between workers with bachelor's degrees and those with high school diplomas (often called "unskilled"). Rather than being unskilled, we argue that these workers are STARs because they are skilled through alternative routes--namely their work experience. Using the skill requirements of a worker's current job as a proxy of their actual skill, we find that though both groups of workers make transitions to occupations requiring similar skills to their previous occupations, workers with bachelor's degrees have dramatically better access to higher-wage occupations where the skill requirements exceed the workers' observed skill. This measured opportunity gap offers a fresh explanation of income inequality by degree status and reestablishes the important role of on-the-job training in human capital formation. [Funding for this report was provided by WorkRise.]