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  • Writer's picturePeter Blair

STARs: Skills, Degrees and Labor Market Inequality [NBER]

Telescope looking at starry sky with shooting star by Isaiah Baldissera
Illustration: Isaiah Baldissera

Workers without bachelor's degrees experience a very different wage trajectory compared to their degree-holding peers.

In this working paper for the National Bureau of Economic Research, Peter Blair, Papia Debroy, and Justin Heck find that workers with bachelor’s degrees have "dramatically better access to higher-wage occupations where the skill requirements exceed the workers’ observed skill."

This measured opportunity gap offers a fresh explanation of income inequality by degree status and reestablishes the important role of on-the-job training in human capital formation.

Labor market inequality between workers 'Skilled Through Alternative Routes' or 'STARs', and degree holders is partly due to an opportunity gap. The team of researchers show that while all workers can easily transition to jobs requiring skills similar to their previous job, when there is a larger skills mismatch, STARs experience more friction transitioning to higher wage work than do workers with bachelor’s degrees.


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