Technological Complexity, Wage Differentials and Unemployment

Alberto Dalmazzo

Scandinavian Journal of Economics, 2002, vol. 104, issue 4, 515-530

Abstract: A model is developed to analyse the relation between wages and technological complexity, as characterised by the “O–ring” theory of production. In equilibrium, the adoption of a relatively complex technology induces the employer to pay higher wages. We argue that the model can explain increased within–group wage inequality as a consequence of increased technological heterogeneity among firms. JEL classification: J31; O33

Date: 2002
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