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Skill-Biased Technical Change and Wage Inequality: The U.S. versus Europe

Ryosuke Okazawa ()
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Ryosuke Okazawa: Graduate School of Economics, Kyoto University

No 674, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: This paper analyzes the effect of the recent technical change on the labor market and explains the observed differences in wage inequality among advanced countries. In particular, we focus on the difference between the wage inequality in the U.S. and continental Europe. By introducing human capital investment into Acemoglu (1999)'s model, we show that ex ante homogeneous economies would have distinct ex post wage inequality. In addition, we show that the differences in tax or education system can explain the difference in wage inequality between the U.S. and Europe.

Keywords: skill-biased technical change; wage inequality; human capital investment; matching (search for similar items in EconPapers)
JEL-codes: E24 J24 J31 J64 (search for similar items in EconPapers)
Pages: 21pages
Date: 2009-04
New Economics Papers: this item is included in nep-eec, nep-hrm, nep-lab and nep-mac
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