TY  - RPRT
        AU  - Ngai, L. Rachel
AU  - Sevinc, Orhun
        TI  - A Multisector Perspective on Wage Stagnation
        PY  - 2023/Jul/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 16356
        UR  - https://www.iza.org/publications/dp16356
        AB  - Low-skill workers are concentrated in sectors experiencing fast productivity growth, yet their real wages have stagnated and lagged behind aggregate productivity. We provide evidence demonstrating the importance of a multisector perspective. Central to our mechanism is the decline in the relative price of the low-skill intensive sector driven by its faster productivity growth. This dampens wage gains for low-skill workers by lowering the price of their output relative to their consumption basket, which is further reinforced by shifting them into the sector where less weight is placed on their labor. We calibrate the two-sector model to the 1980–2010 U.S. economy and find this mechanism to be quantitatively important. Our counterfactual analysis reveals that low-skill real wage growth would have nearly doubled if the observed aggregate productivity growth had been evenly distributed across sectors.
        KW  - relative prices
KW  - low-skill wage stagnation
KW  - wage-productivity divergence
KW  - multisector model
KW  - uneven productivity growth
        ER  -