The nano-economics of increasing returns: the rise of services and residual college inequality

Guido Pialli, University of Turin & Maastricht University

Although a vast literature has analyzed the determinants of wage inequality between low-skilled and high-skilled workers, studies investigating the causes of wage inequality within the college education group are relatively sparse. This question is critical given the rise in postgraduate workers and their wage premium to college-only workers in the US economy. This article develops and tests the hypothesis that the shift from a manufacturing economy to a knowledge and service economy is a crucial factor behind the increase in residual wage inequality within the most educated group in the US. The analysis exploits US cross-state variation for the period 1980-2010 and shows that the rise in the service sector employment is indeed positive and significantly associated with the rise in wage inequality within the college graduate workforce. Moreover, the results are robust after accounting for endogeneity issues and across different specifications.

About the speaker

Guido Pialli is a Ph.D. student at the University of Turin and Maastricht University. He obtained his master's degree from the University of Pisa and the Sant'Anna School of Advanced Studies in 2018. His research interests are in the economics of knowledge and innovation, employment and skills, and growth economics.

Date: 24 March 2022

Time: 12: - 13:  CEST