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This dissertation consists of three essays, which mainly talk about the wage inequality caused by outsourcing in the source countries like the US. The title of the first essay is “Does Outsourcing Always Benefit Skilled Labor? A Dynamic Product Cycle Model Approach.” To understand why outsourcing did not cause wage inequality in the 1970s, I build a dynamic product cycle model with three kinds of labor inputs, scientists, white-collar workers, and blue-collar workers. First, only a homogenous representative producer exists in the model and then the paper allows for producer heterogeneity. According to my theoretical model, outsourcing can hurt skilled labor and does not cause wage inequality if outsourcing industries are absolutely blue-collar worker-intensive compared to non-outsourcing industries. Only scientists who conduct research and development always benefit from outsourcing. The second essay is an empirical work. The title is “Outsourcing, Innovation, and Wage Inequality in the United States: What Happened to the Outsourcing Effect on Wage Inequality in the 1970s?” I find that, in the 1970s, white-collar workers’ wages deteriorated and blue-collar workers’ wages were non-decreasing. R&D workers always benefit from outsourcing. Except computers and high-technology capital, innovation expenditure on wage payment was an additional source of wage inequality in the 1980s. The last essay is named “Beyond the Wage Inequality, the Impact of Outsourcing on the U.S. Labor Market.” To understand the impact of outsourcing on employment, I examine laborers’ ages, gender ratio, years of education, and job tenure and retention rates. By employing the January Current Population Survey (CPS) data, the National Bureau of Economic Research (NBER) production data, and outsourcing data provided by Feenstra and Hanson, I find that outsourcing decreased blue-collar laborers’ average years of completed education; increased the hiring of females into white-collar workers, and increased job stability of unskilled and skilled laborers in the 1980s. Thus, outsourcing did not take away unskilled laborers’ jobs but hindered new hiring of young unskilled workers

Since the 1980's, wage inequality in the U.S. has been dramatically increasing. I investigate the impact of occupational structure, measured at the three-digit level, on this trend of growing wage inequality. The investigation is conducted in terms of three major research tasks. First, I test the validity of the 'disaggregate structuration' view in relation to growing wage inequality. The 'disaggregate structuration' view is suggested as an alternative to big class theories. Theorists of the 'disaggregate structuration' view assert that an occupation is a gemeinschaftlich community characterized by internal homogeneity. Thus, this view implies that most of the rise in inequality occurs between occupations and that within-occupational inequality is actually decreasing, due to the progress of 'occupationalization.' My analyses, however, find that the majority of the growth in inequality has occurred within occupations. Secondly, I thus seek a more delineated explanation for the causes of rising within-occupational inequality. I investigate whether previously proposed hypotheses can account for this phenomenon. Hypotheses that I test include demographic change, deindustrialization, unions, insecure employment relations, increases in the return to skill, and changes of firm organizations. Although smaller than within-occupational inequality, between-occupational inequality has also been growing during this period. Thirdly, I therefore investigate the changes of between-occupational inequality. Since between- occupational inequality is a weighted sum of occupational mean wages, I examine whether the same hypotheses tested for within-occupational inequality can explain the changes in occupational mean wages over time. Using the Current Population Survey (CPS) from 1983 to 2002, I find that as within-occupational inequality has grown faster than between-occupational inequality, the direct association between occupational structure and wage inequality has declined over this period. While the importance of general skills (i.e., education) in determining workers' wages is growing, the importance of occupation-specific skills is declining. For regression models of hourly wages, the amount of R-squared increase by adding three-digit occupational codes (331 occupational dummies) in addition to general skills (5 dummies of education) has decreased for this period. Therefore, the strong version of 'aggregate structuration' and 'occupationalization' is not supported. I would like to note, however, that the R-squared of hourly wage increases jumped significantly when we use three-digit occupational codes instead of one-digit occupational codes even after adjusting for the degrees of freedom. Thus, the weak version of structuration is not rejected. For multivariate tests, inequality indexes and other variables by detailed occupation are extracted from each year's CPS and merged into one panel data file with occupation as a unit of analysis. Multi-level growth models are then estimated using detailed occupational categories as the unit of analysis in order to assess how the structural characteristics of occupations affect changes in mean wages and wage inequality over this time period. Contrary to the expectations of the skill-biased technological change hypothesis, changes in the distribution of education do not affect the growth of wage inequality within occupations. In contrast to the traditional view of unions as promoting wage equality, within-occupational inequality is increased by unionization. The increase of female labor market participation seems to pull down inequality in an occupation. Deindustrialization does not account for the rise of intra-occupational inequality, while insecure employment relations do. As expected by the organizational change view, inequality grows faster in high skill jobs and service jobs. Regarding between-occupational inequality, traditional explanations do better jobs in accounting for its change than for within-occupational inequality. Skill biased technological changes and unions have positive effects on occupational mean wages. Multi-level growth models provide additional evidence against disaggregate structuration. The disaggregate structuration view assumes that occupational common interests will be achieved as accomplishment of active occupational associations. Thus, the changes of occupational mean wage, which is a clearly common interest of members in an occupation, should be explained by occupation itself, not by other demographic and institutional variables. Contrary to this expectation, most of the within-occupational variation are not explained well by other demographic and institutional variables, including race, gender, and unions. In conclusion, although sociologists often view occupation as the back-bone of the stratification system, the rise in within-occupational inequality suggests that broader, more complex approaches may be needed in order to better explain the increasing disparity in wages. I suggest that more attention should be given to firm level studies in which changes inside and between firms are investigated. / text

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This thesis presents three essays, which each address a salient recent pattern in the British labour market. The first essay concerns whether or not men and women experience the business cycle differently, through their labour market outcomes, and why this might be the case. The second essay seeks to explain the cyclical amplification of unemployment duration, in particular the substantial and persistent increase in UK long-term unemployment observed during and since the Great Recession. The final essay studies recent changes in British wage inequality. To shed light on the possible factors driving these changes, it asks simply whether they are mostly determined by increasing or decreasing wage dispersion within or between firms. Gender and the business cycle: an analysis of labour markets in the US and UK Starting from an improved understanding of the relationship between gender labour market stocks and the business cycle, we analyse the contributing role of flows in the US and UK. Focusing on the post-2008 recession period, the subsequent greater rise in male unemployment can mostly be explained by a less cyclical response of flows between employment and unemployment for women, especially the entry into unemployment. Across gender and country, the inactivity rate is generally not sensitive to the state of the economy. However, a flows based analysis reveals a greater importance of the participation margin over the cycle. Changes in the rates of flow between unemployment and inactivity can each account for around 0.8-1.1 percentage points of the rise in US male and female unemployment rates during the latest downturn. For the UK, although the participation flow to unemployment similarly contributed to the increase of the female unemployment rate, this was not the case for men. The countercyclical flow rate from inactivity to employment was also more significant for women, especially in the US, where it accounted for approximately all of the fall in employment, compared with only forty percent for men. Long-term unemployment and the Great Recession: evidence from UK stocks and flows Although modest by historical standards, long-term unemployment nonetheless more than doubled during the UK’s Great Recession. Only a small fraction of this persistent increase can be accounted for by the changing composition of unemployment across personal and work history characteristics. Through extending a well-known stocks-flows decomposition of labour market fluctuations, the cyclical behaviour of participation flows can account for over two-thirds of the high level of long-term unemployment following the financial crisis, especially the procyclical flow from unemployment to inactivity. The pattern of these flows and their changing composition suggest a general shift in the labour force attachment of the unemployed during the downturn. Recent changes in British wage inequality: evidence from firms and occupations Using a linked employer-employee dataset, we study the increasing trend in British wage inequality over the past two decades. The dispersion of wages within firms accounts for the majority of changes to wage variance. Approximately all of the contribution to inequality dynamics from firm-specific factors are absorbed by controlling for the changing occupational content of wages. The modest trend in between-firm wage inequality is explained by a combination of changes in between-occupation inequality and the occupational composition of firms and employment. These results are robust to using weekly, hourly or annual measures of employee pay.

I depart from traditional theories of production fragmentation to allow for the explicit consideration of frictions on the labor and product markets. These are crucial in yielding outcomes that cast some shadows on “optimistic” views of outsourcing that emerge from frictionless models. While in general the overall positive welfare effect is confirmed, the distributional consequences may be particularly adverse for some categories of workers. The three chapters that constitute the thesis deal, respectively, with the role played by the imperfect mobility of workers, imperfect competition in outsourcing industries, and imperfect factor price adjustments.

This thesis investigates the co-evolution of the changing structure of occupations and the growth in wage inequality in Britain since the 1970s and the subsequent stabilisation during the 2000s. Occupations provide the single most important unit of analysis for economic inequality in stratification research, providing the basis for socioeconomic status, prestige scales, job desirability scores, and social class schemas. Although there was a ‘massive rise’ in wage inequality, relatively little is known about the relationship between the occupational structure and the growth in wage inequality. Since sociologists tend to place a lot of emphasis on the role of occupations in structuring economic inequalities, we might expect them to play a key role in accounting for trends in overall wage inequality. More recent strands of sociological theory, however, argue that the link between occupations and economic inequalities might have been weakening over time. This thesis assesses these claims in relation to the over time trends in between- and within-occupation-inequality. It finds that the growth in overall wage inequality was largely due to growing inequality between occupations, not within them. The growth in between-occupation inequality was largely due to higher-paying occupations receiving the largest wage gains. Furthermore, and perhaps surprisingly, only a handful of occupations account for the majority of the rise in wage inequality, indicating caution should be exercised in generating accounts about the role for occupations in accounting for overall inequality. Along the way, this thesis attempts to address the extent to which the structuring of the growth in wage inequality by occupations was due to the changing composition of incumbents within occupations (namely the rise in educational attainment), in spite of data limitations. Finally, this thesis takes to task what the implications of the ‘massive rise’ in wage inequality implies for the broader categories sociologists use to capture economic inequalities based on aggregations of occupations.

Yang Wang

The thesis consists of three essays on urban economies. The first essay investigates the relationship between proximity to larger markets and wage distribution within local labor markets. In this essay I derive a theoretical spatial skill demand equation that positively links skill premiums to market access. Using data from U.S. metropolitan areas, I provide evidence that while average wages are higher in metropolitan areas with higher market access, as suggested in the existing literature, the wage differential is unequally distributed across the metropolitan workers. That is, greater access to markets is linked to relatively weaker outcomes for those at the bottom of the wage distribution.<p> The second essay examines the extent of urban sprawl with respect to the volatility of local economies. Specifically, it investigates how uncertainty over future land rents explains changes in the extent of urban sprawl. To theoretically study this relationship, I develop a theoretical model that links sprawl to shocks to changes in land development rent, among other factors. The econometric analysis draws upon panel data from U.S. metropolitan areas over the 1980-2000 censuses. To measure urban sprawl, I construct a distinctive measure that better captures the distribution of population density within metropolitan areas. Using suitable proxy that accounts for uncertainty over future land rents, I provide robust evidence confirming the theoretical prediction. That is, metropolitan areas with higher levels of uncertainty have a lower level of sprawl.<p> Finally, the third essay uses theories from urban production economics to empirically investigate the relationship between the economic performance of U.S. metropolitan areas and their respective amounts of sprawl. Specifically, this essay provides a comprehensive empirical analysis on the impact of urban sprawl on labor productivity. The main finding suggests that higher levels of urban sprawl are negatively associated with average labor productivity. Interestingly, this negative association is even stronger in smaller metropolitan areas. Still, there is evidence that the significance of the negative impact of sprawl is not homogenous across major industries.