Economics Macro Seminar - "Competition for Managers and the Rise in Skill Premium"

This paper analyzes the influence of managers on the growth of wage inequality. Data from the American Community Survey(1950-2019) reveal that managerial occupations increased from 4% to 19%, while the wage gap between high and low-skilled non-managerial workers increased from 28% to 70%. The wage gap between managers and low-skilled workers increased from 45% to 129% over the same period. We offer a model in which managers enhance the productivity of high-skilled workers. The model illustrates how competition for managerial services impacts compensation for managers and high-skill workers. Our findings align with the observed wage trends in the United States.