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Skill-Biased Technological Change and Inequality in the U.S

Author

Listed:
  • Ana Ferreira

    (Nova School of Business and Economics)

Abstract

Since the 1980s, income inequality has increased markedly and has reached the highest level ever since it started being recorded in the U.S. This paper uses an overlapping generations model with incomplete markets that allows for household heterogeneity that is calibrated to match the U.S. economy with the purpose to study how skill-biased technological change (SBTC) and changes in taxation quantitatively account for the increase in inequality from 1980 to 2010. We find that SBTC and taxation decrease account for 48% of the total increase in the income Gini coefficient. In particular, we conclude that SBTC alone accounted for 42% of the overall increase in income inequality, while changes in the progressivity of the income tax schedule alone accounted for 5.7%.

Suggested Citation

  • Ana Ferreira, 2020. "Skill-Biased Technological Change and Inequality in the U.S," Notas Económicas, Faculty of Economics, University of Coimbra, issue 51, pages 91-107, December.
    • Handle: RePEc:gmf:journl:y:2020:i:51:p:91:107
    DOI: 10.14195/2183-203X_51_5
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    Cited by:

    1. Nóbrega, Valter, 2020. "Optimal Taxation and Investment-Specific Technological Change," MPRA Paper 98917, University Library of Munich, Germany.
    2. Coelho, José, 2020. "Universal basic income and skill-biased technological change," MPRA Paper 99195, University Library of Munich, Germany, revised 20 Mar 2020.
    3. Vedor, Bernardo, 2022. "Investment-Specific Technological Change and Universal Basic Income in the U.S," MPRA Paper 111675, University Library of Munich, Germany.

    More about this item

    Keywords

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    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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