Wage Inequality and the New Economy

Philippe Aghion and Peter Howitt

Oxford Review of Economic Policy, 2002, vol. 18, issue 3, 306-323

Abstract: Many economists have argued that the observed increase in wage inequality in developed economies over the past 30 years is due to skill-biased technical progress. In this paper we put forward a somewhat different technology-based argument, namely that the increased inequality was caused by technical change linked to the pervasive innovation wave associated with the New Economy. This technical change was not skill-biased in the usual sense, but rather raised the reward to adaptability. This alternative approach based on the notion of 'general-purpose technology' can shed light on a number of outstanding puzzles on the evolution of wage inequality both between and within educational groups. Copyright 2002, Oxford University Press.

Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:oup:oxford:v:18:y:2002:i:3:p:306-323

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