Economics, Econometrics and Finance
8 years ago

Wage gaps reveal inefficiency, shifting labor boosts productivity post-1980.

International Economic Journal
Inter-industry Wage Differentials and Allocative Inefficiency
Anders Sørensen

Paper Summary

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Inter-industry wage differences can show if moving workers from low- to high-paying sectors boosts overall productivity. Data from OECD countries in the 1970s and 1980s were analyzed. In the 1970s, shifting workers between sectors with different wages didn't help economic growth. But in the 1980s, it did. So, wage gaps only revealed inefficiency in sector allocation after 1980.