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Technological Change, Sectoral Shifts and the Distribution of Earnings: A Human Capital Model

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  • Betts, Julian R.

Abstract

The paper studies the long-run impact of technological change on the labour market in a two-sector model with heterogeneous workers. First it is assumed, in line with stylized facts, that inventions increase both productivity and skill requirements. Such skill-intensive inventions cause increases in inequality, shifts of labour out of the technologically dynamic sector, and relative price changes. In contrast, a skill-neutral invention causes neither changes in inequality nor sectoral shifts, while a skill-extensive invention reduces inequality and causes sectoral shifts toward the innovative sector. Only a skill-neutral invention leads unequivocally to a Pareto improvement.

Suggested Citation

  • Betts, Julian R., 1989. "Technological Change, Sectoral Shifts and the Distribution of Earnings: A Human Capital Model," Queen's Institute for Economic Research Discussion Papers 275217, Queen's University - Department of Economics.
    • Handle: RePEc:ags:queddp:275217
    DOI: 10.22004/ag.econ.275217
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    References listed on IDEAS

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