Skill-Biased Technological Change and Inequality in the U.S
Ana Melissa Ferrreira
Authors registered in the RePEc Author Service: Ana Melissa Ferreira ()
MPRA Paper from University Library of Munich, Germany
Since the 1980’s, income inequality has increased markedly and is at the highest level ever since it has been recorded in the U.S. This paper uses an overlapping-generations model with incomplete markets that allows for household heterogeneity and that is calibrated to match the U.S. economy with the purpose to study how skill-biased technological change (SBTC) and changes in taxation quantitatively account for the increase in inequality from 1980 to 2010. We find that SBTC and taxation decrease account for 48% of the total increase in the income Gini coefficient. In particular, we conclude that SBTC alone accounted for 42% of the overall increase in income inequality, while changes in the progressivity of the income tax schedule alone accounted for 5,7%.
Keywords: Technical change; Income Inequality; Wealth Inequality; Heterogeneity; Taxation (search for similar items in EconPapers)
JEL-codes: E21 J0 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mac
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