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Technological Change and Wages: An Inter-Industry Analysis

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  • Ann P. Bartel
  • Nachum Sicherman

Abstract

Previous research has found evidence that wages in industries characterized as high tech,' or subject to higher rates of technological change, are higher. In addition, there is evidence that skill-biased technological change is responsible for the dramatic increase in the earnings of more educated workers relative to less educated workers that took place during the 1980s. In this paper, we match a variety of industry level measures of technological change to a panel of young workers observed between 1979 and 1993 (NLSY) and examine the role played by unobserved heterogeneity in explaining the positive relationships between technological change and wages, and between technological change and the education premium. We find evidence that the wage premium associated with technological change is primarily due to the sorting of better workers into those industries. In addition, the education premium associated with technological change is found to be the result of an increase in demand for the innate ability or other observable characteristics of more educated workers.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5941.

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Date of creation: Feb 1997
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Publication status: published as Journal of Political Economy, Vol. 107, no. 2 (April 1999): 285-325.
Handle: RePEc:nbr:nberwo:5941

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  1. Jacob Mincer, 1991. "Human Capital, Technology, and the Wage Structure: What Do Time Series Show?," NBER Working Papers 3581, National Bureau of Economic Research, Inc.
  2. Bartel, Ann P & Sicherman, Nachum, 1998. "Technological Change and the Skill Acquisition of Young Workers," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 718-55, October.
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  5. McKinley L. Blackburn & David Neumark, 1991. "Omitted-Ability Bias and the Increase in the Return to Schooling," NBER Working Papers 3693, National Bureau of Economic Research, Inc.
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  7. Henry S. Farber & Robert Gibbons, 1994. "Learning and Wage Dynamics," Working Papers 707, Princeton University, Department of Economics, Industrial Relations Section..
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  16. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins Of Technology-Skill Complementarity," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 693-732, August.
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  19. Haworth, C T & Rasmussen, David W, 1971. "Human Capital and Inter-Industry Wages in Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 53(4), pages 376-80, November.
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  21. Dunne, Timothy & Schmitz, James A, Jr, 1995. "Wages, Employment Structure and Employer Size-Wage Premia: Their Relationship to Advanced-Technology Usage at US Manufacturing Establishments," Economica, London School of Economics and Political Science, vol. 62(245), pages 89-107, February.
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