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Wage Inequality and the New Economy

Author

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  • Philippe Aghion
  • Peter Howitt

Abstract

Many economists have argued that the observed increase in wage inequality in developed economies over the past 30 years is due to skill-biased technical progress. In this paper we put forward a somewhat different technology-based argument, namely that the increased inequality was caused by technical change linked to the pervasive innovation wave associated with the New Economy. This technical change was not skill-biased in the usual sense, but rather raised the reward to adaptability. This alternative approach based on the notion of 'general-purpose technology' can shed light on a number of outstanding puzzles on the evolution of wage inequality both between and within educational groups. Copyright 2002, Oxford University Press.

Suggested Citation

  • Philippe Aghion & Peter Howitt, 2002. "Wage Inequality and the New Economy," Oxford Review of Economic Policy, Oxford University Press, vol. 18(3), pages 306-323.
  • Handle: RePEc:oup:oxford:v:18:y:2002:i:3:p:306-323
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    Citations

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    Cited by:

    1. Piva, Mariacristina & Santarelli, Enrico & Vivarelli, Marco, 2005. "The skill bias effect of technological and organisational change: Evidence and policy implications," Research Policy, Elsevier, vol. 34(2), pages 141-157, March.
    2. Cristiano PERUGINI & Fabrizio POMPEI, 2009. "Technological change and income distribution in Europe," International Labour Review, International Labour Organization, vol. 148(1-2), pages 123-148, June.
    3. Amine, Samir & Lages Dos Santos, Pedro, 2011. "The influence of labour market institutions on job complexity," Research in Economics, Elsevier, vol. 65(3), pages 209-220, September.
    4. Sid Durbin, 2004. "Review of Workplace Skills, Technology Adoption and Firm Productivity: A Review," Treasury Working Paper Series 04/16, New Zealand Treasury.
    5. Magalhães, Manuela & Hellström, Christian, 2013. "Technology diffusion and its effects on social inequalities," Journal of Macroeconomics, Elsevier, vol. 37(C), pages 299-313.
    6. R. Antonietti, 2005. "The role of general and firm-specific training for new technology adoption and economic growth: a critical review," Working Papers 538, Dipartimento Scienze Economiche, Universita' di Bologna.
    7. Paola Gritti & Riccardo Leoni, 2013. "The impact on wages of generic competencies, psychological capital, new work practices and digital technologies," Working Papers (2013-) 1301, University of Bergamo, Department of Management, Economics and Quantitative Methods.
    8. Soogwan Doh & Connie McNeely, 2012. "A multi-dimensional perspective on social capital and economic development: an exploratory analysis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 49(3), pages 821-843, December.
    9. repec:iab:iabzaf:v:41:i:2/3:p:259-285 is not listed on IDEAS
    10. Dögüs, Ilhan, 2017. "Rising wage dispersion between white-collar and blue-collar workers and market concentration: The case of the USA, 1966-2011," Discussion Papers 62, University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS).
    11. repec:spr:italej:v:3:y:2017:i:1:d:10.1007_s40797-016-0046-7 is not listed on IDEAS
    12. Riccardo Lucchetti & Stefano Staffolani & Alessandro Sterlacchini, 2004. "Computers, Wages and Working Hours in Italy," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 63(3-4), pages 329-353, December.
    13. Bresnahan, Timothy, 2010. "General Purpose Technologies," Handbook of the Economics of Innovation, Elsevier.
    14. Bellmann, Lutz & Cornelißen, Thomas & Hübler, Olaf & Pahnke, André, 2008. "Betriebliche Reorganisation, Entlohnung und Beschäftigungsstabilität (Organisational change, wages and job stability)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(2/3), pages 259-285.
    15. Stodder, James, 2009. "Complementary credit networks and macroeconomic stability: Switzerland's Wirtschaftsring," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 79-95, October.
    16. Nick Adnett & Peter Davies, 2005. "Competition between or within schools? Re-assessing school choice," Education Economics, Taylor & Francis Journals, vol. 13(1), pages 109-121.
    17. Samir Amine & Pedro Lages Dos Santos, 2010. "Technological choices and unemployment benefits in a matching model with heterogenous workers," Journal of Economics, Springer, vol. 101(1), pages 1-19, September.

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