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Ability Biased Technological Transition, Wage Inequality and Growth

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Author Info
Galor, Oded
Moav, Omer

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Abstract

This paper develops a growth model in which the endogenous evolution of technological progress and wage inequality is consistent with the observed pattern in the United States and several European economies in the last two centuries. The model accounts for: a) the rise in wage inequality between and within groups of skilled and unskilled workers, the increase in the average wage of skilled workers despite the increase in supply, and the decline in the average wage of unskilled workers, as observed during the 1980s and 1990s; b) the rise in wage inequality within groups and the decline in wage inequality between groups during the 1970s; c) the cyclical evolution of the wage differential between skilled and unskilled workers in the last centuries; and d) the productivity slowdown.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1972.

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Date of creation: Sep 1998
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Handle: RePEc:cpr:ceprdp:1972

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Related research
Keywords: Growth; productivity slowdown; Technological Change; Wage Inequality;

Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

Cited by:
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  1. Jean-Marie Viaene & Itzhak Zilcha, 2001. "Human Capital Formation, Income Inequality and Growth," Tinbergen Institute Discussion Papers 01-104/2, Tinbergen Institute. [Downloadable!]
    Other versions:
  2. Matteo Cervellati & Uwe Sunde, 2005. "Human Capital Formation, Life Expectancy, and the Process of Development," American Economic Review, American Economic Association, vol. 95(5), pages 1653-1672, December. [Downloadable!]
  3. Catia Batista, 2007. "Joining the EU: Capital Flows, Migration and Wages," Economics Series Working Papers 342, University of Oxford, Department of Economics. [Downloadable!]
  4. Ana Hidalgo-Cabrillana, 2004. "Does Asymmetric Information Promote Talented People?," Economics Working Papers we042809, Universidad Carlos III, Departamento de Economía. [Downloadable!]
  5. Andrea Vindigni, 2002. "Income Distribution and Skilled Biased Technological Change," Working Papers 843, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  6. Oded Galor & Omer Moav, 2004. "From Physical to Human Capital Accumulation: Inequality and the Process of Development," GE, Growth, Math methods 0410005, EconWPA. [Downloadable!]
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  7. Galor, Oded & Moav, Omer, 2000. "Natural Selection and the Origin of Economic Growth," Arbetsrapport 2000:5, Institute for Futures Studies. [Downloadable!]
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  8. Joseph K. Kaboski, 2009. "Education, Sectoral Composition and Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(1), pages 168-182, January. [Downloadable!] (restricted)
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  9. Meckl, Juergen & Zink, Stefan, 2002. "Solow and Heterogeneous Labor: A Neoclassical Explanation of Wage Inequality," IZA Discussion Papers 668, Institute for the Study of Labor (IZA). [Downloadable!]
  10. Roland Benabou, 2004. "Inequality, Technology, and the Social Contract," NBER Working Papers 10371, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Tiago Sequeira & Ana Balcão Reis, 2004. "Human Capital Composition, R&D and the Increasing Role of Services," Development and Comp Systems 0408011, EconWPA. [Downloadable!]
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  12. Oded Galor & Omer Moav, 2004. "Das Human Kapital: A Theory of the Demise of the Class Structure," GE, Growth, Math methods 0410003, EconWPA. [Downloadable!]
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  13. Areendam Chanda & Carl-Johan Dalgaard, 2005. "Wage Inequality and the Rise of Services," DEGIT Conference Papers c010_016, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
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