Interindustry Mobility and the Cyclical Upgrading of Labor

Kenneth J. McLaughlin · Mark Bils

132 citations0/0 files storedJournal of Labor Economics

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Labor market dynamics and wage inequality Historical Economic and Social Studies Migration and Labor Dynamics

Abstract

We investigate whether a market‐clearing model is consistent with industry employment and wage patterns related to the cyclical upgrading of labor. We demonstrate that Roy's (1951) market‐clearing model of self‐selection would account for cyclical upgrading if industries were characterized by positive selection. Wage comparisons of industry movers and stayers in panel data do reveal widespread positive selection. Also consistent with the Roy model, composition‐corrected industry wages are more cyclical in high‐wage cyclical industries. The Roy model does fail to explain predictable patterns in the wage changes of industry movers, so we consider several market‐clearing and queuing extensions.

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2018The unpublished manuscript 1951SOME THOUGHTS ON THE DISTRIBUTION OF EARNINGS 1 1988Efficiency Wages and the Inter-Industry Wage Structure 1978Education and Self-Selection 1985A Near-Rational Model of the Business Cycle, with Wage and Price Inertia 1993Assignment Models of the Distribution of Earnings 1979Education and Self-Selection 1990The Empirical Content of the Roy Model

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