Wage Inequality and Segregation by Skill

Michael Kremer, Eric Maskin

NBER Working Paper No. 5718
Issued in August 1996
NBER Program(s):   LS   EFG

Evidence from the US, Britain, and France suggests that recent growth in wage inequality has been accompanied by greater segregation of high- and low-skill workers into separate firms. A model in which workers of different skill-levels are imperfect substitutes can simultaneously account for these increases in segregation and inequality either through technological change, or, more parsimoniously, through observed changes in the skill-distribution

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