Technological knowledge and wages: from skill premium to wage polarization

Oscar Afonso (), Tiago Sequeira and Derick Almeida
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Oscar Afonso: Universidade do Porto

Journal of Economics, 2023, vol. 140, issue 2, No 1, 93-119

Abstract: Abstract This paper studies the impact of automation shocks on the technological-knowledge level, skill premium (or wage inequality), real prices, output, and economic growth. To highlight the economic mechanisms, we devise a task-based direct technical change model that allows us to analyze the determinants of the threshold task, the relative output and prices between sectors, intra- and inter-sectoral wage differences, wage polarization and economic growth rates. We observe that an increase in the efficiency of skilled or unskilled workers as well as a decrease in the efficiency of medium-skilled workers as possible result of automation always increase wage polarization as well as economic growth rates. In a quantitative exercise we also assess the change in the weight of routine and non-routine sectors in the economy. In this context, governments should implement policies to support the professional transition of medium-skilled workers to non-routinazable tasks.

Keywords: Automation; Technological-knowledge progress; Wages; Growth (search for similar items in EconPapers)
JEL-codes: O10 O30 O40 O41 P10 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:140:y:2023:i:2:d:10.1007_s00712-023-00833-y

DOI: 10.1007/s00712-023-00833-y

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