Does the sector bias of skill-biased technical change explain changing wage inequality? by Jonathan Haskel

Cover of: Does the sector bias of skill-biased technical change explain changing wage inequality? | Jonathan Haskel

Published by National Bureau of Economic Research in Cambridge, MA .

Written in English

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Subjects:

  • Wage differentials -- Econometric models.,
  • Wages -- Effect of technological innovations on -- Econometric models.

Edition Notes

Book details

StatementJonathan E. Haskel, Matthew J. Slaughter.
SeriesNBER working paper series -- working paper 6565, Working paper series (National Bureau of Economic Research) -- working paper no. 6565.
ContributionsSlaughter, Matthew J., National Bureau of Economic Research.
The Physical Object
Pagination41 p. :
Number of Pages41
ID Numbers
Open LibraryOL22403050M

Download Does the sector bias of skill-biased technical change explain changing wage inequality?

This paper examines whether the sector bias of skill-biased technical change (sbtc) explains changing skill premia within countries in recent decades.

First, using a two-factor, two-sector, two-country model we demonstrate that in many cases it is the sector bias of sbtc that determines sbtc's effect on relative factor prices, not its factor bias. Downloadable (with restrictions). This paper examines whether the sector bias of skill-biased technical change (SBTC) explains changing skill premia within countries in recent decades.

First, using a two-factor, two-sector, two-country model we demonstrate that in many cases it is the sector bias of SBTC that determines SBTC’s effect on relative factor prices, not its factor bias.

"Does the sector bias of skill-biased technical change explain changing skill premia?," European Economic Review, Elsevier, vol. 46(10), pagesby: Get this from a library. Does the Sector Bias of Skill-Biased Technical Change Explain Changing Wage Inequality?.

[Jonathan E Haskel; Matthew J Slaughter] -- This paper examines whether the sector bias of skill-biased technical change (sbtc) explains changing skill premia within countries in recent decades.

First, using a two-factor, two-sector. Get this from a library. Does the sector bias of skill-biased technical change explain changing wage inequality?.

[Jonathan Haskel; Matthew J Slaughter; National Bureau of Economic Research.] -- Abstract: This paper examines whether the sector bias of skill-biased technical change (sbtc) explains changing skill premia within countries in recent decades.

With a low elasticity of substitution the growth rate of the wage inequality is small and may be even negative if the growth rate of the ratio of skilled to unskilled labor is positive and if there is skill biased technical change.

With a high elasticity the wage inequality is less by: This section describes patterns of wage inequality and then describes three factors that affect the extent to which technical change is skill-biased.

Patterns of Income Differentials This section documents three stylized yet potentially surprising patterns for inequality in developing countries. This study provides strong evidence for an increase in wage inequality induced by skill-biased technological change in the UK manufacturing industry between and   that don’t fit in very well with a skill-biased technical change explanation.

We were motivated to embark on a Don Quixote mission, a noble cause that wasn’t going to go anywhere [laughs]. One thing we pointed out, for example, is that women are lower skilled than men, if you take the fact that they have lower wages as evidence of their skill.

On Endogenous Growth, Wage Inequality and. Wage Inequality and Government Intervention. (), Does the Sector Bias of Skill-Biased Technical Change. This paper draws on existing empirical literature and an original theoretical model to argue that globalization and skill supply affect the extent to which technology adoption in developing countries favors skilled workers.

Developing countries are experiencing technical change that is skill-biased because skill-biased technologies are becoming relatively by: 1. Explaining Rising Inequality: Skill-Biased Technical Change and NorthSouth Trade Journal of Economic Surveys, Vol.

22, Issue 3, pp.July 49 Pages Posted: 11 Jun Cited by: Most studies of skill biased technological change use broad, supply-side data sources with only shallow data on technology and skills. As a consequence, these studies suffer from overly simple notions of technological change, poor measures of skill, or both.

The recent rise in wage inequality is usually attributed to skill-biased technical change (SBTC), associated with new computer technologies. We review the evidence for this hypothesis, focusing on the implica-tions of SBTC for overall wage inequality and for changes in wage differentials between groups.

A key problem for the SBTC hypothesisFile Size: KB. Skill-biased technological change increases wage inequality by altering the _____ high-skilled workers relative to low-skilled workers. demand for The introduction of word processing software that increases the demand for workers with computer skills relative to those without such skills is an example of.

There are a limited but growing number of empirical studies on the relationship between technological change and wage inequality in developing countries. Berman, Somanathan, and Tan () find evidence of skill-biased technological change in India in the s using panel data disaggregated by Cited by:   Trade, Skill Biased Technical Change and Wage Inequality in South Africa Review of International Economics, Vol.

21, Issue 3, pp. 13 Pages Posted: 16 Jul Cited by: 3. model to skill-biased technical change (SBTC) both theoretically and quantitatively. First, we theoretically show that in response to SBTC, the model generates behavior consistent with the U.S. data including (i) a rise in total wage inequality, (ii) an initial.

larger increases in the demand for labor than in the supply of labor explain. versus producing agricultural products that can be imported more cheaply from abroad is an example of how increasing wage inequality can result from. globalization and skill-biased technological change have contributed to.

increasing wage inequality. jor driving forces of the labour market and inequality, productivity shocks and skill-biased technical change (SBTC). For this purpose, we residually measure SBTC from time series of the skill premium and the relative labour supply.

Importantly, the ambiguity of empiri­File Size: KB. This paper compares the evolution of wage inequality along three different skill groups (low- middle- and high-skilled) across five industrialized countries (Finland, Germany, Italy, Korea and the US). Despite similar exposure to technological change, the countries exhibit significant differences in inequality trajectories, suggesting that inequality is not necessarily an unavoidable by.

computers is the underlying driver of this skill biased technical change. This paper explores the skill biased technical change hypothesis and resulting implications, shows how the simple model falls short in explaining wage and job polarization and suggests future work that could be done to better understand the changes we have seen in theFile Size: KB.

Canada where the wage-setting is decentralized and unions are weak, a negative demand change depresses the wages of less-skilled workers.

By contrast, in France or Germany where the wage-setting is more centralized and unions are strong, wages of less-skilled workers remain fixed despite the same negative demand change, and so does wage Size: KB. The recent rise in wage inequality is usually attributed to skill‐biased technical change (SBTC), associated with new computer technologies.

We review the evidence for this hypothesis, focusing on the implications of SBTC for overall wage inequality and for changes in wage differentials between groups.

A key problem for the SBTC hypothesis is that wage inequality stabilized in the s Cited by: This essay will explain why wage inequality has been increasing in the United States; in doing so, we will draw upon the scholarly literature, including work done turing sector.

evidence strongly suggests that there has been skill-biased technical change that has benefited more-skilled workers over the past 30 years. By skill-biased change. skill-biased technical change (SBTC), associated with the development of personal computers and related information technologies.

We review the evidence in favor of this hypothesis, focusing on the implications of SBTC for economy-wide trends in wage inequality, and for the evolution of wage differentials between various groups. The three sector Ramsey model of trade, technology adoption, skill biased technical change and wage inequality is presented in section 2.

Section 3 calibrates a trade and relative wage path that broadly reproduces the development in South Africa during The. Wage inequality has increased in many OECD countries since the s.

Many have explained this development in terms of skill-biased technological change. According to theories of skill-biased technological change, wage inequality is the result of a technology-induced increase in the demand for skills which has not been met by equal increases in the supply of skills.

labor together with residual wage inequality grew monotonically. The focus of this article is to provide a simple and plausible mechanism that explains the joint behavior of these variables. It is widely accepted that, in recent decades, developed economies experi-enced “skill-biased” technological change (i.e., change that favored individuals.

Changes in Wage Inequality Stephen Machin and John Van Reenen Special Paper No April This paper is an extended version of a Chapter originally written for the New Palgrave Dictionary of Economics. The ESRC has given financial support for this research through the Centre for Economic Performance.

The usual dis-claimer applies. skill biased technical change. The dependence on foreign technology increases with openness and gives higher degree of skill bias, which may explain the observed relative wage path.

Our model calibration is an alternative to econometric studies separating between trade and technology : Jørn Rattsø, Hildegunn E. Stokke. cause of the increase in inequality. * We can understand the behavior of technical change by recognizing that the development and use of technol- ogy is, at least in part, a response to profit incentives.3 When developing skill-biased techniques is more profit- able, new technology will tend to be skill-biased.

Technical Change, Inequality, and The Labor Market∗ Daron Acemoglu June 1, 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. result, the wage premium will change. Several empirical studies support the hypothesis of skill-biased technological change for the US case and show that technology can substitute the less qualified workers and intensify the existing pay inequality between the two categories of Author: Najeh Aissaoui, Lobna Ben Hassen.

Haskel JE,Trade and labor approaches to wage inequality. The paper compares the trade and labor approaches to wage inequality.

It first looks at the theoretical differences, stressing the different roles ascribed to sector and factor bias, labor supply and the theory of technical change in trade models with endogenous prices.

that demand forces have played a key role in shaping wage structure changes during the inequality surge of the s and the polarization that followed. Following Autor, Levy, and Murnane () and Goos and Manning (), we find that these patterns may in part be explained by a richer version of the skill-biased technical change (SBTC) hypoth.

Iftechnological changes are skill-biased in the longrun, then the effectwill be enhanced, while if technology is skill-saving, then the effect will be diluted. In the current paper technological transition is ability-(skill)-biased only in the short run, but it may be either.

Skill-Biased Technical Change1 Giovanni L. Violante New York University, and CEPR Abstract Skill-Biased Technical Change is a shift in the production technology that favors skilled over unskilled labor by increasing its relative productivity and, therefore, its relative demand.

Traditionally, technical change is viewed as Size: KB. Does the Sector Bias of Skill-Biased Technological Change Explain Changing Wage Inequality?, An econometric survey of the effect of technical change on the structure of pay and jobs’, The Institute for Fiscal Studies Working Paper Series No.

Understanding the Debate Over Inequality, Skills, and the Rise of the 1% conversation with his latest book, and technology” — or “skill-biased technological change,” as it’s. We document the growth in higher education costs and tuition over the past 50 years. To explain these trends, we develop a general equilibrium model with skill- and sector-biased technical change.

Finding the model’s parameters through a combination of estimation and calibration, we show that it can explain the rise in college costs between andalong with the increase in college Cited by: 3.schooling indicates that technical change has been skill-biased during the past sixty years and probably for most of the twentieth century.

Furthermore, an acceleration in skill bias during the past few decades appears to be the main cause of the increase in inequality. We can understand the behavior of technical change by recognizing that.Total Compensation Inequality vs. Wage Inequality Observable and Unobservable Components of Changes in Wage Inequality Permanent and Transitory Components of Earnings Inequality Cohort vs.

Time Effects in Inequality and Returns to Education Longer-Term Historical Changes in the U.S. Wage Structure Size: 1MB.

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