Technical Change, Inequality, and the Labor Market / Daron Acemoglu.

By:

Acemoglu, Daron

Contributor(s):

National Bureau of Economic Research

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w7800.Publication details: Cambridge, Mass. National Bureau of Economic Research 2000.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: This essay discusses the effect of technical change on wage inequality. I argue that the behavior of wages and returns to schooling indicates that technical change has been skill-biased during the past sixty years. Furthermore, the recent increase in inequality is most likely due to an acceleration in skill bias. In contrast to twentieth century developments, most technical change during the nineteenth century appears to be skill-replacing. I suggest that this is because the increased supply of unskilled workers in the English cities made the introduction of these technologies profitable. On the other hand, the twentieth-century has been characterized by skill-biased technical change because the rapid increase in the supply of skilled workers has induced the development of skill-complementary technologies. The recent acceleration in skill bias is in turn likely to have been a response to the acceleration in the supply of skills during the past several decades.

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Working Paper	Biblioteca Digital	Colección NBER	nber w7800 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w7797 Looking for Contagion: Evidence from the ERM /	nber w7798 Winning Isn't Everything: Corruption in Sumo Wrestling /	nber w7799 Market Responses to Interindustry Wage Differentials /	nber w7800 Technical Change, Inequality, and the Labor Market /	nber w7801 Interest Rates, Contagion and Capital Controls /	nber w7802 Collective Choice and Voluntary Provision of Public Goods /	nber w7803 Does Diversification Destroy Value? Evidence From Industry Shocks /	Next

July 2000.

This essay discusses the effect of technical change on wage inequality. I argue that the behavior of wages and returns to schooling indicates that technical change has been skill-biased during the past sixty years. Furthermore, the recent increase in inequality is most likely due to an acceleration in skill bias. In contrast to twentieth century developments, most technical change during the nineteenth century appears to be skill-replacing. I suggest that this is because the increased supply of unskilled workers in the English cities made the introduction of these technologies profitable. On the other hand, the twentieth-century has been characterized by skill-biased technical change because the rapid increase in the supply of skilled workers has induced the development of skill-complementary technologies. The recent acceleration in skill bias is in turn likely to have been a response to the acceleration in the supply of skills during the past several decades.