Effects of skill supply on wage returns to skill

In addition to confirming the known negative effects of college supply on college returns and experience supply on experience returns in white men, this study for the first time finds such effects in black men and black women. Moreover, greater supply of high social origin white men is found to lower their wages, suggesting that social origin indicates a skill component acquired in homes and families that reacts to its supply in white men in the same way as education and experience. However, college educated white women managed to increase their wages even as their numbers grew, probably reflecting the power of the feminist movement and its educated white female leadership to counteract wage competition pressures. Exploring how supply of one type of skill affects wage returns to another type of skill, I find negative effect of college supply on experience returns and no effect of experience supply on college returns, thus confirming the modernization theory's prediction of achieved college education replacing seniority as the major wage determinant in modern societies. Past studies were wrong to assume net college substitution between white men and women. Among college graduates of different race and sex backgrounds, the substitution is gross at best. White women display a surprisingly beneficial labor force entry for white men who survived it. Aside from that, the pattern of gross substitution favors the more disadvantaged over the less disadvantaged workers, which indirectly confirms modernization theory's prediction of the achieved skills replacing the ascribed ones. Methodologically, I introduce the multilevel cohort analysis, which helps clarify the widespread confusion of age and cohort effects in skill supply research.; On a continuum from the theories of political action and institutional constrains on the left to the economic theory of skill supply, represented by the hedonic price and modernization theories, on the right, the four race/sex subgroups of this study can be placed as follows: black women, white women, black men, and white men.