Skill Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles

David E. Card and John Enrico DiNardo

No 8769, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The rise in wage inequality in the U.S. labor market during the 1980s is usually attributed to 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. A fundamental problem for the SBTC hypothesis is that wage inequality stabilized in the 1990s, despite continuing advances in computer technology. SBTC also fails to explain the closing of the gender gap, the stability of the racial wage gap, and the dramatic rise in education-related wage gaps for younger versus older workers. We conclude that the SBTC hypothesis is not very helpful in understanding the myriad shifts in the structure of wages that have occurred over the past three decades.

JEL-codes: J31 O33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-ino, nep-lab, nep-ltv and nep-pke
Date: 2002-02
Note: LS
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