Technological Change, Sectoral Shifts and the Distribution of Earnings: A Human Capital Model

Julian R. Betts

Working Paper from Economics Department, Queen's University

Abstract: This paper studies the long-run impact of technological change on the labour market in a two-sector model with heterogeneous workers. It is assumed that inventions increase both productivity and skill requirements. Such skill-intensive inventions cause increases in inequality, shifts in labour out of the technologically dynamic sector, and relative price changes. In contrast, a skill-neutral invention cause neither changes in inequality nor sectoral shifts, while a skill-extensive invention reduces inequality and causes sectoral shifts toward the innovative sector. Only a skill-neutral invention leads unequivocally to a Pareto improvement.

Keywords: technological change; human resources; skilled workers (search for similar items in EconPapers)
Pages: 50 pages
Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:748

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