Abstract

This paper looks at the contribution of occupations to changes in the distribution of wages. We …rst present a simple model where wages in each occupation are set on the basis of linear task pricing model. We argue that this simple model provides a general way of capturing changes in wages induced by factors like technological change and o¤shoring. Using Current Population Survey (CPS) for the years 1983-85 and 2000-02, we …nd that the simple linear skill pricing model characterizes well the observed changes in the wage distribution. In particular, it goes a long way towards accounting for the U-shaped feature of the curve depicting changes in real wages at each percentile of the overall wage distribution. We then explicitly quantify the contribution of these factors to changes in wage inequality relative to other explanations such as de-unionization and changes in the returns to education. We do so using a decomposition based on the in‡uence function regression approach suggested by Firpo, Fortin, and Lemieux (2009). The results indicate that technological change and o¤shoring are two among a variety of other

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