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Technological knowledge and wages: from skill premium to wage polarization

Author

Listed:
  • Oscar Afonso

    (Universidade do Porto)

  • Tiago Sequeira

    (University of Coimbra)

  • Derick Almeida

    (University of Coimbra)

Abstract

This paper studies the impact of automation shocks on the technological-knowledge level, skill premium (or wage inequality), real prices, output, and economic growth. To highlight the economic mechanisms, we devise a task-based direct technical change model that allows us to analyze the determinants of the threshold task, the relative output and prices between sectors, intra- and inter-sectoral wage differences, wage polarization and economic growth rates. We observe that an increase in the efficiency of skilled or unskilled workers as well as a decrease in the efficiency of medium-skilled workers as possible result of automation always increase wage polarization as well as economic growth rates. In a quantitative exercise we also assess the change in the weight of routine and non-routine sectors in the economy. In this context, governments should implement policies to support the professional transition of medium-skilled workers to non-routinazable tasks.

Suggested Citation

  • Oscar Afonso & Tiago Sequeira & Derick Almeida, 2023. "Technological knowledge and wages: from skill premium to wage polarization," Journal of Economics, Springer, vol. 140(2), pages 93-119, October.
    • Handle: RePEc:kap:jeczfn:v:140:y:2023:i:2:d:10.1007_s00712-023-00833-y
    DOI: 10.1007/s00712-023-00833-y
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    References listed on IDEAS

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    More about this item

    Keywords

    Automation; Technological-knowledge progress; Wages; Growth;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • P10 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - General

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