Intellectual Property Rights, Professional Business Services and Top Wage Inequality

Görkem Bostancı, Economics, University of Pennsylvania

Abstract: High skill labor demand is infrequent but firms cannot adjust perfectly due to several adjustment costs. Professional Business Service Firms help alleviate this problem by allowing high skill labor to move across firms, reducing idiosyncratic part of labor demand risk. This allows high skill talent to be utilized better and increases their productivity. We show that improvements in intellectual property rights protection in the late 70s alleviated concerns regarding sharing sensitive data with 3rd party firms, thus helped professional business services to thrive in the following decades. Better utilization of high skill increased their compensation, contributing to the increasing wage inequality above the median income since 1980.

Michelle Eckert is Marketing and Communications Coordinator for the Mack Institute, where she works to engage students, researchers, and corporate partners in opportunities for collaboration. Michelle received her B.A. in Art from Valparaiso University in 2007. Her background includes two AmeriCorps terms of service working to teach mathematics, computer literacy, and job readiness skills to out-of-school youth in Philadelphia, focusing particularly on promoting access to post-secondary education.