Wage Dispersion and Technical Progress / Pierre-Richard Agenor, Joshua Aizenman.

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Agenor, Pierre-Richard

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w5417.Publication details: Cambridge, Mass. National Bureau of Economic Research 1996.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: Since the early 1980s, wage dispersion and the ratio of skilled to unskilled employment have increased significantly in several industrial countries. A number of economists have attributed these trends to skill-biased technical progress. This paper studies the wage and employment effects of technological changes of this type. The analysis is based on a model with a heterogeneous work force and a segmented labor market. Skill-biased technical progress is modeled as a shock that switches demand from unskilled to skilled labor in the primary, high-wage sector, while leaving the total demand for labor in that sector constant at initial wages. Such a shock reduces total employment in the primary sector, as the equilibrium increase in skilled labor employment is smaller than the fall in employment of unskilled labor. Efficiency factors are shown to magnify the adverse employment effects of pro-skilled technical change.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w5417 (Browse shelf(Opens below))	Not For Loan

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January 1996.

Since the early 1980s, wage dispersion and the ratio of skilled to unskilled employment have increased significantly in several industrial countries. A number of economists have attributed these trends to skill-biased technical progress. This paper studies the wage and employment effects of technological changes of this type. The analysis is based on a model with a heterogeneous work force and a segmented labor market. Skill-biased technical progress is modeled as a shock that switches demand from unskilled to skilled labor in the primary, high-wage sector, while leaving the total demand for labor in that sector constant at initial wages. Such a shock reduces total employment in the primary sector, as the equilibrium increase in skilled labor employment is smaller than the fall in employment of unskilled labor. Efficiency factors are shown to magnify the adverse employment effects of pro-skilled technical change.