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The U.K. as a Technological Follower: Higher Education Expansion and the College Wage Premium
[Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality]

Author

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  • Richard Blundell
  • David A Green
  • Wenchao Jin

Abstract

The proportion of U.K. people with university degrees tripled between 1993 and 2015. However, over the same period the time trend in the college wage premium has been extraordinarily flat. We show that these patterns cannot be explained by composition changes. Instead, we present a model in which firms choose between centralized and decentralized organizational forms and demonstrate that it can explain the main patterns. We also show the model has implications that differentiate it from both the exogenous skill-biased technological change model and the endogenous invention model, and that U.K. data fit with those implications. The result is a consistent picture of the transformation of the U.K. labour market in the last two decades.

Suggested Citation

  • Richard Blundell & David A Green & Wenchao Jin, 2022. "The U.K. as a Technological Follower: Higher Education Expansion and the College Wage Premium [Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(1), pages 142-180.
    • Handle: RePEc:oup:restud:v:89:y:2022:i:1:p:142-180.
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    References listed on IDEAS

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    1. Ian Walker & Yu Zhu, 2008. "The College Wage Premium and the Expansion of Higher Education in the UK," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(4), pages 695-709, December.
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    9. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 733-783, October.
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    Cited by:

    1. Anna Stansbury & Dan Turner & Ed Balls, 2023. "Tackling the UK’s regional economic inequality: binding constraints and avenues for policy intervention," Contemporary Social Science, Taylor & Francis Journals, vol. 18(3-4), pages 318-356, August.
    2. Jonas Loebbing, 2020. "Redistributive Income Taxation with Directed Technical Change," CESifo Working Paper Series 8743, CESifo.
    3. David A. Green, 2023. "Basic income and the labour market: Labour supply, precarious work and technological change," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(4), pages 1195-1220, November.
    4. Lindner, Attila & Muraközy, Balázs & Reizer, Balázs & Schreiner, Ragnhild, 2022. "Firm-level technological change and skill demand," LSE Research Online Documents on Economics 117905, London School of Economics and Political Science, LSE Library.
    5. Argan, Damiano & Gary-Bobo, Robert & Goussé, Marion, 2023. "Is there a devaluation of degrees ? Unobserved heterogeneity in returns to education and early experience," CEPREMAP Working Papers (Docweb) 2304, CEPREMAP.
    6. Burdett, Ashley & Etheridge, Ben & Wang, Yikai & Tang, Li, 2023. "Worker productivity during Covid-19 and adaptation to working from home," ISER Working Paper Series 2023-04, Institute for Social and Economic Research.

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