EconPapers    
Economics at your fingertips  
 

The Effects of Technical Change on Labour Market Inequalities

Andreas Hornstein, Per Krusell () and Giovanni Violante ()

No 5025, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In this chapter we inspect economic mechanisms through which technological progress shapes the degree of inequality among workers in the labour market. A key focus is on the rise of US wage inequality over the past 30 years. However, we also pay attention to how Europe did not experience changes in wage inequality but instead saw a sharp increase in unemployment and an increased labour share of income, variables that remained stable in the US We hypothesize that these changes in labour market inequalities can be accounted for by the wave of capital-embodied technological change, which we also document. We propose a variety of mechanisms based on how technology increases the returns to education, ability, experience, and ‘luck’ in the labour market. We also discuss how the wage distribution may have been indirectly influenced by technical change through changes in certain aspects of the organization of work, such as the hierarchical structure of firms, the extent of unionization, and the degree of centralization of bargaining. To account for the US-Europe differences, we use a theory based on institutional differences between the United States and Europe, along with a common acceleration of technical change. Finally, we briefly comment on the implications of labour market inequalities for welfare and for economic policy.

Keywords: inequality; institutions; labour market; skills; technological change (search for similar items in EconPapers)
JEL-codes: D30 J30 O30 (search for similar items in EconPapers)
Date: 2005-04
New Economics Papers: this item is included in nep-dev and nep-lab
References: Add references at CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=5025 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Chapter: The Effects of Technical Change on Labor Market Inequalities (2005) Downloads
Working Paper: The effects of technical change on labor market inequalities (2004) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:5025

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=5025

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2021-11-07
Handle: RePEc:cpr:ceprdp:5025