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THE DOUBLE ROLE OF SKILLED LABOR, NEW TECHNOLOGIES AND WAGE INEQUALITY
Author(s) -
Egger Hartmut,
Grossmann Volker
Publication year - 2005
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.2005.00206.x
Subject(s) - economics , labour economics , technological change , wage inequality , productivity , incentive , production (economics) , wage , inequality , technical change , affect (linguistics) , efficiency wage , microeconomics , macroeconomics , mathematical analysis , linguistics , philosophy , mathematics
We examine the relationship between the supply of skilled labor, technological change and relative wages. In accounting for the role of skilled labor in both production activities and productivity‐ enhancing ‘support’ activities we derive the following results. First, an increase in the supply of skilled labor raises the employment share of non‐production labor within firms, without lowering relative wages. Second, new technologies raise wage inequality only in so far as they give incentives to firms to reallocate skilled labor towards non‐production activities. In contrast, skill‐biased technological change of the sort usually considered in the literature does not affect wage inequality.