Unraveling wage inequality: tangible and intangible assets, globalization and labor market regulations

Antonio Francesco Gravina () and Neil Foster-McGregor
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Antonio Francesco Gravina: University of Palermo

Empirical Economics, 2024, vol. 67, issue 4, No 3, 1375-1420

Abstract: Abstract In this paper, we study the asymmetric effects of different types of capital-embodied technological change, as proxied by tangible and intangible assets, on relative wages (high- to medium-skilled, high- to low-skilled and medium- to low-skilled workers), relying upon the technology-skill complementarity and polarization of the labor force frameworks. We also consider two additional major channels that contribute to shaping wage differentials: globalization (in terms of trade openness and global value chains participation) and labor market institutions. The empirical analysis is carried out using a panel dataset comprising 17 mostly advanced European economies and 5 industries, with annual observations spanning the period 2008–2017. Our findings suggest that software and databases—as a proxy for intangible technologies—exert downward pressure on low-skilled wages, while robotics is associated with a polarization of the wage distribution at the expense of middle-skilled labor. Additionally, less-skilled workers’ relative wages are negatively affected by trade openness and global value chain participation, but positively influenced by sector-specific labor market regulations.

Keywords: Robots; Intangibles; Automation; Institutions; Globalization; Wage differentials (search for similar items in EconPapers)
JEL-codes: C01 F16 F63 J31 O11 O33 O43 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s00181-024-02587-y

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