Skill Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles

Abstract

The rise in wage inequality in the U.S. labor market during the 1980s is usually attributed to skill-biased technical change (SBTC), associated with the development of personal computers and related information technologies. We review the evidence in favor of this hypothesis, focusing on the implications of SBTC for economy-wide trends in wage inequality, and for the evolution of wage differentials between various groups. A fundamental problem for the SBTC hypothesis is that wage inequality stabilized in the 1990s, despite continuing advances in computer technology. SBTC also fails to explain the closing of the gender gap, the stability of the racial wage gap, and the dramatic rise in education-related wage gaps for younger versus older workers. We conclude that the SBTC hypothesis is not very helpful in understanding the myriad shifts in the structure of wages that have occurred over the past three decades.

Graduate returns, degree class premia and higher education expansion in the UK

“…It is also conceivable that any impact of SBTC might have been more pronounced among higher performing graduates. However, most analysis of SBTC focuses on its impact on pay in the 1970s and 1980s (Card andDi Nardo, 2002, andHaskel andSlaughter, 2002) and, therefore, we would expect any impact to be already apparent among the early cohorts we observe.…”

Changes in Returns to Task-Specific Skills and Gender Wage Gap

“…On the other hand, gender wage gap was stable until 1980 and dramatically decreased afterwards. Despite the fact that the rise of male wage inequality and the fall of gender wage inequality occurred at the same time, many papers, including Blau and Kahn (1997) and Card and DiNardo (2002), do not consider the role that technological change played in narrowing the gender wage gap. They argue that, since men were more educated and experienced than women during this period, the rise in returns to skills caused by the technological change should have widened the gender wage gap.…”

Die Erfassung von Job-Tasks in persönlichen Befragungen. Ein neues Instrument zur Erhebung von Anforderungen am Arbeitsplatz

“…Some claim that this position cannot be reconciled with SBTC and thus constitutes a competing explanation (e.g. Card and DiNardo 2002). Autor et al (2008), on the other hand, while agreeing that the reduced value of the minimum wage played some role in the development of wage inequality in the lower half of the income distribution during the 1980s, nevertheless argue that 4 Autor et al (2003), for example, make the point that service jobs such as truck driving or haircutting, which usually require a rather low level of qualification, cannot (yet) be substituted by computers, while tasks, which require a medium level of education, such as e.g.…”