Substitution of Graduate by Other Labour

Tinbergen, Jan

doi:10.1111/j.1467-6435.1974.tb01903.x

Cited by 179 publications

(104 citation statements)

References 3 publications

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“…Most economic analyses of changes in wage structure and skill differentials build on the ideas proposed in Tinbergen (1974Tinbergen ( , 1975 and developed in Welch (1973), Katz and Murphy (1992), and Card and Lemieux (2001), among many others. In this approach, the college/high-school log wage ratio serves as a summary index of the premium that high skill workers command relative to low skill workers, and this premium is determined by the relative supply and relative demand for skills.…”

Section: The Canonical Modelmentioning

confidence: 99%

Skills, Tasks and Technologies: Implications for Employment and Earnings

Acemoğlu¹,

Autor²

2010

1,412

2,281

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A central organizing framework of the voluminous recent literature studying changes in the returns to skills and the evolution of earnings inequality is what we refer to as the canonical model, which elegantly and powerfully operationalizes the supply and demand for skills by assuming two distinct skill groups that perform two different and imperfectly substitutable tasks or produce two imperfectly substitutable goods. Technology is assumed to take a factor-augmenting form, which, by complementing either high or low skill workers, can generate skill biased demand shifts. In this paper, we argue that despite its notable successes, the canonical model is largely silent on a number of central empirical developments of the last three decades, including: (1) significant declines in real wages of low skill workers, particularly low skill males; (2) non-monotone changes in wages at different parts of the earnings distribution during different decades; (3) broad-based increases in employment in high skill and low skill occupations relative to middle skilled occupations (i.e., job 'polarization'); (4) rapid diffusion of new technologies that directly substitute capital for labor in tasks previously performed by moderatelyskilled workers; and (5) expanding offshoring opportunities, enabled by technology, which allow foreign labor to substitute for domestic workers in specific tasks. Motivated by these patterns, we argue that it is valuable to consider a richer framework for analyzing how recent changes in the earnings and employment distribution in the United States and other advanced economies are shaped by the interactions among worker skills, job tasks, evolving technologies, and shifting trading opportunities. We propose a tractable task-based model in which the assignment of skills to tasks is endogenous and technical change may involve the substitution of machines for certain tasks previously performed by labor. We further consider how the evolution of technology in this task-based setting may be endogenized. We show how such a framework can be used to interpret several central recent trends, and we also suggest further directions for empirical exploration.

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Section: The Canonical Modelmentioning

confidence: 99%

Skills, Tasks and Technologies: Implications for Employment and Earnings

Acemoğlu¹,

Autor²

2010

1,412

2,281

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“…The persistently rising demand for educated labor in advanced economies was first noted by the Nobel Prize winning economist Jan Tinbergen (28), and is often referred to as the "education race" model (19). Its primary implication is that if the supply of educated labor does not keep pace with persistent outward shifts in demand for skills, the skill premium will rise.…”

Section: Bringing the Supply-demand Framework To The Datamentioning

confidence: 99%

Skills, education, and the rise of earnings inequality among the “other 99 percent”

Autor

2014

Science

823

490

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The singular focus of public debate on the "top 1%" of households overlooks the component of earnings inequality that is arguably most consequential for the "other 99%" of citizens: the dramatic growth in the wage premium to higher education and cognitive ability. This review documents the central role of both the supply and demand for skills in shaping inequality, discusses why skill demands have persistently risen in industrialized countries, and considers the economic value of inequality alongside its potential social costs. I conclude by highlighting the constructive role for public policy in fostering skills formation and preserving economic mobility.

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“…Increases in the supply of skills are needed in order to counterbalance the pressure that technology has to increase inequality. Under this view wage inequality is the outcome of a "race" between technology and education using the felicitous expression of Tinbergen (1974) which gives the title to the book by Goldin and Katz (2008). Technology is driving a moving escalator of inequality upwards and increases in the supply of skill through the education system are necessary to maintain or reduce the current amount of inequality.…”

Section: What Caused the Shift In Demand?mentioning

confidence: 99%

Wage inequality, technology and trade: 21st century evidence

Reenen

2011

Labour Economics

140

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This paper describes and explains some of the principal trends in the wage and skill distribution in recent decades. There have been sharp increases in wage inequality across the OECD, beginning with the US and UK at the end of the 1970s. A good fraction of this inequality growth is due to technology-related increases in the demand for skilled workers outstripping the growth of their supply. Since the early 1990s, labour markets have become more polarized with jobs in the middle third of the wage distribution shrinking and those in the bottom and top third rising. I argue that this is because computerization complements the most skilled tasks, but substitutes for routine tasks performed by middle wage occupations such as clerks, leaving the demand for the lowest skilled service tasks largely unaffected. Finally, I argue that technology is partly endogenous, for example it has been spurred by trade with China. Thus, trade does matter for changes in the labour market through inducing faster technical change rather than just through the conventional Heckscher-Ohlin mechanism.

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Substitution of Graduate by Other Labour

Cited by 179 publications

References 3 publications

Skills, Tasks and Technologies: Implications for Employment and Earnings

Skills, Tasks and Technologies: Implications for Employment and Earnings

Skills, education, and the rise of earnings inequality among the “other 99 percent”

Wage inequality, technology and trade: 21st century evidence

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