>Galbraith cites a study by Chinhui Juhn, Kevin Murphy, and Brooks Pierce
>that separates "three distinct patterns of rising inequality, of
>approximately equal importance." The third is "unobserved skill," a
>category in the discussion of income inequality, originating in the late
>60s. Can anyone explain this category a little? Galbraith calls it the
>"mysterious third factor," that it's "a residual unattributable to any
>measureable characteristic." Is anyone familiar with the study
>Galbraith cites? If unobserved skill isn't amenable to measurement (of
>what kind, I guess is the quesiton), what kind of explanatory or
>analytic power does it have?
That's the classic econometrician's dodge - when you've got something you can't explain with your regressions, attribute it to some "unobserved" factor. In productivity work, it's always "technological change"; in the labor markets, it's "unobserved skill"; in finance, it's "noise." Josh Mason told me that someone - perhaps Will Milberg, but he wasn't sure - said at a New School/CEPA seminar last year that hegemony consists in being able to name the residual.
Doug