What is Driving US and Canadian Wages: Exogenous Technical Change or Endogenous Choice of Technique?
AbstractThis paper proposes a new and unified explanation for the following trends observed over the last 25 years: (1) the increased returns to education, (2) the slow measured growth in TFP in an economy undergoing massive changes in its methods of production, and (3) the poor wage performance, relative to TFP growth, of both young high school and college educated workers. The explanation we propose downplays the role of exogenous skill-biased technological change and instead emphasizes how the endogenous choice of modes of organization, influenced by changes in factor supplies, can generate the above observations. For example, we argue that increased education attainment, through its effect of the choice production techniques, may have been the major cause for the increased differential between more and less educated workers over the last quarter of a century. The evidence we examine to test our hypothesis is based on US and Canadian data over the period 1971 - 95. We pay particular attention to explaining the difference between our results and those associated with the skill-biased technical change hypothesis.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6853.
Date of creation: Dec 1998
Date of revision:
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Find related papers by JEL classification:
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
This paper has been announced in the following NEP Reports:
- NEP-ALL-1998-12-28 (All new papers)
- NEP-DGE-1998-12-28 (Dynamic General Equilibrium)
- NEP-LTV-1999-01-04 (Unemployment, Inequality & Poverty)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- James Albrecht & Susan Vroman, 2000.
"A Matching Model with Endogenous Skill Requirements,"
Econometric Society World Congress 2000 Contributed Papers
0774, Econometric Society.
- James Albrecht & Susan Vroman, 2002. "A Matching Model with Endogenous Skill Requirements," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 283-305, February.
- Paul Beaudry & David Green, 1997.
"Cohort Patterns in Canadian Earnings: Assessing the Role of Skill Premia in Inequality Trends,"
NBER Working Papers
6132, National Bureau of Economic Research, Inc.
- Paul Beaudry & David A. Green, 2000. "Cohort patterns in Canadian earnings: assessing the role of skill premia in inequality trends," Canadian Journal of Economics, Canadian Economics Association, vol. 33(4), pages 907-936, November.
- Timothy F. Bresnahan & Manuel Trajtenberg, 1992.
"General Purpose Technologies "Engines of Growth?","
NBER Working Papers
4148, National Bureau of Economic Research, Inc.
- Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
- W. Erwin Diewert & Kevin J. Fox, 1999. "Can measurement error explain the productivity paradox?," Canadian Journal of Economics, Canadian Economics Association, vol. 32(2), pages 251-280, April.
- Per Krusell & Lee E. Ohanian & JosÃˆ-Victor RÃŒos-Rull & Giovanni L. Violante, 2000.
"Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis,"
Econometrica, Econometric Society,
Econometric Society, vol. 68(5), pages 1029-1054, September.
- Per Krusell & Lee E. Ohanian & Jose-Victor Rios-Rull & Giovanni L. Violante, 1997. "Capital-skill complementarity and inequality: a macroeconomic analysis," Staff Report, Federal Reserve Bank of Minneapolis 239, Federal Reserve Bank of Minneapolis.
- Francesco Caselli, 1999. "Technological Revolutions," American Economic Review, American Economic Association, vol. 89(1), pages 78-102, March.
- Diewert, W E & Woodland, A D, 1977. "Frank Knight's Theorem in Linear Programming Revisited," Econometrica, Econometric Society, Econometric Society, vol. 45(2), pages 375-98, March.
- Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(3), pages 410-42, June.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.