TY  - JOUR
AU  - Harrigan,James
AU  - Balaban,Rita
TI  - U.S. Wages in General Equilibrium:  The Effects of Prices, Technology, and Factor Supplies, 1963-1991
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6981
PY  - 1999
Y2  - February 1999
UR  - http://www.nber.org/papers/w6981
L1  - http://www.nber.org/papers/w6981.pdf
N1  - Author contact info:
James Harrigan
Department of Economics
University of Virginia
P.O. Box 400182
Charlottesville, VA 22904-4182
Tel: 434-243-8354
Fax: 434-982-2904
E-Mail: harrigan@nber.org
AB  - Wage inequality in the United States has increased, and many suspect that the main causes are changes in technology, international competition, and factor supplies. Our empirical model estimates the general equilibrium relationship between wages and technology, prices, and factor supplies. The model is based on the neoclassical theory of production, and is implemented by assuming that GDP is a function of prices, technology levels, and supplies of capital and different types of labor. We find that relative factor supply and relative price changes are both important in explaining the growing return to skill. In particular, we find that capital accumulation and the fall in the price of traded goods served to increase the return to education.
ER  -