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Technology and the Labor Market

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  • Jacob Mincer
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    Abstract

    Economic developments of the past three decades posed new questions to economists: what are the causes of fluctuations in rates of return to human capital? What is the relation between the changing skill–wage structure and changing overall wage inequality? Does the widening of the wage structure produce an equilibrating supply response? What are the causes, dimensions, and implications of the “technological cycle” for wages, unemployment, and its “natural rate”? Why is the long-term trend of human capital formation relentlessly upward? My research of the past decade, among that of other economists, attempted to provide answers to these questions, as described above. In the course of the analysis several misconceptions are clarified: (1) The view of an increasing “wage gap” as a worsening “social divide” misses the incentive effects of the increased rates of return on furthering investments in human capital. These are empirically documented. (2) Growing overall wage inequality can conceal a declining inequality of opportunity as it did in recent decades. (3) Technological unemployment as an aggregate phenomenon appears to be a myth. (4) The concurrent supply response to increasing demand for human capital applies to investments, not to the stock. The cumulation of investments (such as enrollments) over time produces a lag in the response of the human capital stock. This lag is a basic cause of the “technological cycle.” Finally, it is worth noting that a positive skill bias is not inherent in technological changes. These may sometimes carry a negative effect on the demand for human capital. The implications of “deskilling” (the assembly line is an example) would be the opposite of what we found for the recent decades (1970–2000). However the long-term growth of human capital suggests a positive skill-bias in the long run. Copyright Kluwer Academic Publishers 2003

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    Bibliographic Info

    Article provided by Springer in its journal Review of Economics of the Household.

    Volume (Year): 1 (2003)
    Issue (Month): 4 (December)
    Pages: 249-272

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    Handle: RePEc:kap:reveho:v:1:y:2003:i:4:p:249-272

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    Web page: http://www.springerlink.com/link.asp?id=109451

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    Keywords: wage inequality; human capital; technology; unemployment;

    References

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    1. Jacob Mincer & Stephan Danninger, 2000. "Technology, Unemployment, and Inflation," NBER Working Papers 7817, National Bureau of Economic Research, Inc.
    2. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
    3. Johnson, William R & Skinner, Jonathan, 1986. "Labor Supply and Marital Separation," American Economic Review, American Economic Association, vol. 76(3), pages 455-69, June.
    4. Mattila, J. Peter, 1982. "Determinants of Male School Enrollments, A Time-Series Analysis," Staff General Research Papers 10849, Iowa State University, Department of Economics.
    5. Ann P. Bartel & Nachum Sicherman, 1995. "Technological Change and the Skill Acquisition of Young Workers," NBER Working Papers 5107, National Bureau of Economic Research, Inc.
    6. Krueger, Alan B, 1993. "How Computers Have Changed the Wage Structure: Evidence from Microdata, 1984-1989," The Quarterly Journal of Economics, MIT Press, vol. 108(1), pages 33-60, February.
    7. Chiswick, Barry R & Mincer, Jacob, 1972. "Time-Series Changes in Personal Income Inequality in the United States from 1939, with Projections to 1985," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages S34-S66, Part II, .
    8. Finis Welch, 1979. "Effects of Cohort Size on Earnings: The Baby Boom Babies' Financial Bust," UCLA Economics Working Papers 146, UCLA Department of Economics.
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