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Wage inequality, skills and mastering new technologies

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  • Jose M. Quintero-Holguin

Abstract

In this paper I provide a new explanation for the increasing inequality between skilled and unskilled. This work introduces a problem solving based model in which agents invest in technological innovations to solve problems and sell their solutions in the market. Each agent has feasible set they can solve which depends on their skills and the set of technology they have access to. However, unlike the skilled biased technological change explanation, I do not assume that new technologies are necessarily complementary with skills. Instead, skills will play a role in how fast agents are able to adopt new technologies. High skilled individuals will adopt new technologies a lower cost relative to the unskilled. Under this frame, the model sets two different mechanisms that feed the wage gap between skilled and unskilled: productivity and access to the latest technological innovations.

Suggested Citation

  • Jose M. Quintero-Holguin, 2018. "Wage inequality, skills and mastering new technologies," Documentos CEDE 16353, Universidad de los Andes, Facultad de Economía, CEDE.
    • Handle: RePEc:col:000089:016353
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    References listed on IDEAS

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    More about this item

    Keywords

    Skill-biased technological change; wage structure; adopting technologies.;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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