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Power-Biased Technological Change and the Rise in Earnings Inequality

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  • Frederick Guy

    ()
    (School of Management and Organizational Psychology, Birkbeck College)

  • Peter Skottz

    ()
    (Department of Economics, University of Massachusetts)

Abstract

New information and communication technologies, we argue, have been ‘power- biased’: they have allowed firms to monitor low-skill workers more closely, thus reducing the power of these workers. An efficiency wage model shows that ‘power-biased technical change’ in this sense may generate rising wage inequality accompanied by an increase in both the effort and unemployment of low-skill workers. The skill-biased technological change hypothesis, on the other hand, others no explanation for the ob- served increase in effort.

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File URL: http://www.ecineq.org/milano/WP/ECINEQ2005-06.pdf
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Bibliographic Info

Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 06.

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Length: 24 pages
Date of creation: Nov 2005
Date of revision:
Handle: RePEc:inq:inqwps:ecineq2005-06

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Keywords: power-biased technical change; skill bias; efficiency wages; wage inequality; work intensity.;

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Citations

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Cited by:
  1. Skott, Peter & Guy, Frederick, 2007. "A model of power-biased technological change," Economics Letters, Elsevier, vol. 95(1), pages 124-131, April.
  2. Peter Skott & Frederick Guy, 2007. "Power, productivity and profits," UMASS Amherst Economics Working Papers 2007-02, University of Massachusetts Amherst, Department of Economics.

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