Who's not Working and Why

There is a large body of academic literature providing theoretical and empirical explanations for the sources of change in labour markets. Why then should we spend time reading another one? This book is different. Pryor and Schaffer set out to examine all the potential causes of changes in the US labour market and to determine the relative importance of each. The authors modify their data obtained from the Current Population and National Adult Literacy Surveys so that education, employment and wages in 3‐digit occupations can be tracked for the period 1970 to 1996. They provide evidence to support the already well‐understood changes in the labour market, which include increasing wage inequalities within and across demographic groups and occupations, the increasing rate of return to knowledge accumulation and the rising rate of joblessness of the less‐educated. Because the number of jobs requiring schooling has not increased as fast as the supply of higher‐educated workers, jobs that require low levels of education are being increasingly filled by workers whose educational credentials exceed requirements. Hence, they argue that the wage inequalities for the skilled have increased and this has had knock‐on effects on the job opportunities of the less‐skilled. Joblessness of the less‐skilled is not therefore related to the disappearance of low‐skilled jobs but to the lack of jobs for the skilled. If firms know they can employ more‐educated labour at a wage similar to the less‐educated, demand for the less‐educated will fall, increasing marginal productivity and the rates of unemployment for the unskilled. The likelihood of less‐educated workers finding jobs, which provide them with enough money, falls. The lack of jobs for the less‐skilled and the rationales for remaining on benefits are often voiced on chat‐shows and is sometimes referred to as culturally transmitted hopelessness. The authors also place some emphasis on functional literacy as a measure of cognitive skills, which might be correlated with other cognitive skills (including general intelligence) or attitudes (which might also be observable from watching chat‐shows)

Demographic economics · Economics · Inequality · Labour economics · Population · Productivity · Sociology · Wage · Labor market dynamics and wage inequality

• Rising Wage Inequality

  Open Access•Don J Webber•The Economic Journal•2003

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