Wage and Productivity Dispersion in U.S. Manufacturing: The Role of Computer Investment

Timothy Dunne, John Haltiwanger and Lucia Foster

No 7465, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: By exploiting establishment-level data, this paper sheds new light on the source of the changes in the structure of production, wages, and employment that have occurred over the last several decades. Based on theoretical work by Caselli (1999) and Kremer and Maskin (1996), we focus on investigating the following two related hypotheses. The first hypothesis is that the channel through which skill biased technical change works through the economy is via changes in the dispersion in wages and productivity across establishments. The second is that the increased dispersion in wages and productivity across establishments is linked to differential rates of technological adoption across establishments. Our findings are supportive of these hypotheses. Specifically, we find that (1) the between plant component of wage dispersion is a growing part of total wage dispersion, (2) much of the between plant increase in dispersion is within industries, (3) the between plant measures of wage and productivity dispersion have increased substantially over the last few decades, and (4) a substantial fraction of the rising dispersion in wages and productivity is accounted for by increasing wage and productivity differentials across high and low computer investment per worker plants and high and low capital intensity plants.

JEL-codes: J3 O3 (search for similar items in EconPapers)
Date: 2000-01
New Economics Papers: this item is included in nep-dev, nep-his, nep-ino and nep-lab
Note: EFG PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (58)

Published as Timothy Dunne & Lucia Foster & John Haltiwanger & Kenneth R. Troske, 2004. "Wage and Productivity Dispersion in United States Manufacturing: The Role of Computer Investment," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 397-430, April.

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Working Paper: Wage and Productivity Dispersion in U.S. Manufacturing: The Role of Computer Investment (2002)
Working Paper: Wage and Productivity Dispersion in U.S. Manufacturing: The Role of Computer Investment (2000)
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