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Technology and U.S. wage inequality: a brief look

  • David Card
  • John E. DiNardo

As labor market analysts in the late 1980s and early 1990s documented a rising wage inequality, a series of papers argued that this development was related to rapid technological change. These papers and the large literature that followed established a basis for the virtually unanimous agreement among economists that developments in computers and related information technologies in the 1970s, '80s, and '90s have led to increased wage inequality. ; This view has become known as the "skill-biased technological change" (SBTC) hypothesis-the view that a burst of new technologies increased demand by employers for highly skilled workers (who are more likely to use computers) and that this increased demand led to a rise in the wages of the highly skilled relative to those of the less skilled. ; The authors of this article reconsider the evidence for the SBTC hypothesis and focus on changes over time in overall wage inequality and in the evolution of different groups of workers' relative wages. In doing so, they conclude that SBTC falls far short of unicausal explanation of the substantial changes in the U.S. wage structure of the 1980s and 1990s and does not, by itself, prove to be particularly helpful in organizing or understandings these changes. The article concludes that it is time to re-evaluate the case that SBTC offers a satisfactory explanation for the rise in U.S. wage inequality.

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Article provided by Federal Reserve Bank of Atlanta in its journal Economic Review.

Volume (Year): (2002)
Issue (Month): Q3 ()
Pages: 45-62

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Handle: RePEc:fip:fedaer:y:2002:i:q3:p:45-62:n:v.87no.3
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  1. Eli Berman & John Bound & Zvi Griliches, 1993. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc.
  2. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain The Rising Return To College For Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 705-746, May.
  3. N. F. R. Crafts & C. K. Harley, 1992. "Output growth and the British industrial revolution: a restatement of the Crafts-Harley view," Economic History Review, Economic History Society, vol. 45(4), pages 703-730, November.
  4. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1997. "Computing Inequality: Have Computers Changed the Labor Market?," NBER Working Papers 5956, National Bureau of Economic Research, Inc.
  5. David Card & John E. DiNardo, 2002. "Skill Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," NBER Working Papers 8769, National Bureau of Economic Research, Inc.
  6. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, And The Demand For Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 339-376, February.
  7. Maxine Berg & Pat Hudson, 1992. "Rehabilitating the industrial revolution," Economic History Review, Economic History Society, vol. 45(1), pages 24-50, 02.
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