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Divergent Paths: Unpacking the role of skill-biased and routine-biased technological change on urban income inequality in China

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  • Xing, Zuge
  • He, Canfei
  • Pan, Yuxin

Abstract

Biased technological changes have reshaped urban labor markets, significantly affecting income distribution. Despite the recognition of skill-biased technological change (SBTC) and routine-biased technological change (RBTC) frameworks as key to explaining income inequality, it remains unclear whether all types of biased technological changes widen urban income inequality (UII). This paper uses machine learning methods on Chinese census data from 2000 to 2015 to build a large sample urban labor income dataset and analyzes the effects of SBTC, non-routine cognitive RBTC, and non-routine manual RBTC on UII. The results reveal that SBTC and non-routine cognitive RBTC exacerbate UII in China, while non-routine manual RBTC can reduce it and weaken the adverse distributional effects of SBTC. The influence of these technological changes varies markedly across cities with different human capital, foreign direct investment, and economic complexity. The findings of this study contribute to a deeper understanding of the interplay between technological progress and labor market income distribution and offer insights for policymakers in developing countries to formulate targeted labor skill training and employment diversification strategies.

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  • Xing, Zuge & He, Canfei & Pan, Yuxin, 2026. "Divergent Paths: Unpacking the role of skill-biased and routine-biased technological change on urban income inequality in China," Technological Forecasting and Social Change, Elsevier, vol. 224(C).
    • Handle: RePEc:eee:tefoso:v:224:y:2026:i:c:s0040162525005499
    DOI: 10.1016/j.techfore.2025.124518
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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics

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