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.
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
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