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Power-Biased Technological Change and the Rise in Earnings Inequality

Peter Skott () and Frederick Guy ()

UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

Abstract: New information and communication technologies, we argue, have been 'power-biased': they have allowed firms to monitor low-skill workers more closely, thus reducing the power of these workers. An efficiency wage model shows that 'power-biased technical change' in this sense may generate rising wage inequality accompanied by an increase in both the effort and unemployment of low-skill workers. The skill-biased technological change hypothesis, on the other hand, offers no explanation for the observed increase in effort. JEL Categories: J31, O33

Keywords: power-biased technical change; skill bias; efficiency wages; wage inequality; work intensity (search for similar items in EconPapers)
Date: 2005-10
New Economics Papers: this item is included in nep-ict and nep-lab
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