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Power-Biased Technological Change and the Rise in Earnings Inequality

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Author Info
Peter Skott () (University of Massachusetts Amherst)
Frederick Guy () (Birkbeck College)

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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, offers no explanation for the observed increase in effort. JEL Categories: J31, O33

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Paper provided by University of Massachusetts Amherst, Department of Economics in its series Working Papers with number 2005-17.

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Date of creation: Oct 2005
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Handle: RePEc:ums:papers:2005-17

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

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  1. Donald W. Katzner & Peter Skott, 2004. "Economic Explanation, Ordinality and the Adequacy of Analytic Specification," Working Papers 2004-02, University of Massachusetts Amherst, Department of Economics. [Downloadable!]
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  2. Skott, Peter, 2005. "Fairness as a source of hysteresis in employment and relative wages," Journal of Economic Behavior & Organization, Elsevier, vol. 57(3), pages 305-331, July. [Downloadable!] (restricted)
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  3. David Card & Francis Kramarz & Thomas Lemieux, 1999. "Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France," Canadian Journal of Economics, Canadian Economics Association, vol. 32(4), pages 843-877, August. [Downloadable!] (restricted)
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  4. Francis Green, 2001. "It's Been A Hard Day's Night: The Concentration and Intensification of Work in Late Twentieth-Century Britain," British Journal of Industrial Relations, Blackwell Publishers Ltd/London School of Economics, vol. 39(1), pages 53-80, 03. [Downloadable!] (restricted)
  5. Larry W. Hunter & John J. Lafkas, 2003. "Opening the box: Information technology, work practices, and wages," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 56(2), pages 224-243, January.
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  9. Steve J. Davis & John Haltiwanger, 1991. "Wage Dispersion Between and Within U.S. Manufacturing Plants, 1963-1986," NBER Working Papers 3722, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  12. Nickell, Stephen & Bell, Brian, 1996. "Changes in the Distribution of Wages and Unemployment in OECD Countries," American Economic Review, American Economic Association, vol. 86(2), pages 302-08, May. [Downloadable!] (restricted)
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  17. DiNardo, John E & Pischke, Jorn-Steffen, 1997. "The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 291-303, February.
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  18. Bresnahan, Timothy F, 1999. "Computerisation and Wage Dispersion: An Analytical Reinterpretation," Economic Journal, Royal Economic Society, vol. 109(456), pages F390-415, June. [Downloadable!] (restricted)
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  19. Bowles, Samuel, 1985. "The Production Process in a Competitive Economy: Walrasian, Neo-Hobbesian, and Marxian Models," American Economic Review, American Economic Association, vol. 75(1), pages 16-36, March. [Downloadable!] (restricted)
  20. Piva, Mariacristina & Santarelli, Enrico & Vivarelli, Marco, 2003. "The Skill Bias Effect of Technological and Organisational Change: Evidence and Policy Implications," IZA Discussion Papers 934, Institute for the Study of Labor (IZA). [Downloadable!]
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  21. Peter Skott & Paul Auerbach, 2004. "Wage inequality and skill asymmetries," Working Papers 2004-03, University of Massachusetts Amherst, Department of Economics. [Downloadable!]
  22. Eli Berman & John Bound & Stephen Machin, 1998. "Implications Of Skill-Biased Technological Change: International Evidence," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1245-1279, November. [Downloadable!] (restricted)
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  23. Green, Francis & McIntosh, Steven, 2001. "The intensification of work in Europe," Labour Economics, Elsevier, vol. 8(2), pages 291-308, May. [Downloadable!] (restricted)
  24. David H. Autor & Frank Levy & Richard J. Murnane, 2001. "The Skill Content of Recent Technological Change: An Empirical Exploration," NBER Working Papers 8337, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  25. 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. [Downloadable!] (restricted)
  26. Francis Green, 2002. "Why Has Work Effort Become More Intense?," Studies in Economics 0207, Department of Economics, University of Kent. [Downloadable!]
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Cited by:
(explanations, 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.)

  1. Peter Skott & Frederick Guy, 2007. "Power, productivity and profits," Working Papers 2007-02, University of Massachusetts Amherst, Department of Economics. [Downloadable!]
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