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The economist Theodore Koutmeridis received the Cairncross Prize from the Scottish Economic Society for his work on ‘The Market for “Rough Diamonds”: Information, Finance and Wage Inequality’. This study was based on research conducted by the scholar as part of his PhD thesis at Warwick University, UK, funded by the Onassis Foundation.
Every year, the Scottish Economic Society awards a prize accompanied by one thousand pounds to the best paper by a younger member of the Society presented at the Society’s Annual Conference. The prize honours the memory of the renowned economist Sir Alec Cairncross.
Theodore Koutmeridis’ study explains the rise in wage inequality in developed economies, and the USA in particular. The extension of higher education to less well-off social classes led to a better allocation of human capital while also expanding the wage gap between different groups in terms of education and work experience. The analysis is based empirically on statistical data that show a rapid drop in the wages of unskilled, young workers in real terms, since talented but financially constrained individuals (the ‘rough diamonds’) can now opt to study. The key political economy conclusion is that providing less unequal educational opportunities leads to a rise -and not a drop- in wage inequality.
Theodore Koutmeridis is Lecturer in Economic Science at St. Andrews University, Scotland.
Read the full text of the study here.
