Summary.
According to empirical studies, the wage differential by skills evolved non–monotonically in the past decades although the relative supply of skilled labor steadily increased. The present paper provides a theoretical explanation for this finding. In our setting, technological change intertemporally alters the human–capital investment incentives of heterogeneous individuals. As a consequence of changing incentives, the time path of the relative wage is U–shaped while there is a rise in the share of skilled workers.
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Received: November 28, 2000; revised version: January 30, 2001
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Meckl, J., Zink, S. Human–capital investment and the wage gap. Econ Theory 19, 853–859 (2002). https://doi.org/10.1007/s001990100181
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DOI: https://doi.org/10.1007/s001990100181