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Technological Change and Wages: An Inter-Industry Analysis

  • Ann P. Bartel
  • Nachum Sicherman

Previous research has found evidence that wages in industries characterized as high tech,' or subject to higher rates of technological change, are higher. In addition, there is evidence that skill-biased technological change is responsible for the dramatic increase in the earnings of more educated workers relative to less educated workers that took place during the 1980s. In this paper, we match a variety of industry level measures of technological change to a panel of young workers observed between 1979 and 1993 (NLSY) and examine the role played by unobserved heterogeneity in explaining the positive relationships between technological change and wages, and between technological change and the education premium. We find evidence that the wage premium associated with technological change is primarily due to the sorting of better workers into those industries. In addition, the education premium associated with technological change is found to be the result of an increase in demand for the innate ability or other observable characteristics of more educated workers.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5941.

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Date of creation: Feb 1997
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Publication status: published as Journal of Political Economy, Vol. 107, no. 2 (April 1999): 285-325.
Handle: RePEc:nbr:nberwo:5941
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  1. Altonji, Joseph G & Shakotko, Robert A, 1987. "Do Wages Rise with Job Seniority?," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 437-59, July.
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  7. Donald Siegel, 1998. "The Impact Of Technological Change On Employment: Evidence From A Firm-Level Survey Of Long Island Manufacturers," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 5(2-4), pages 227-246.
  8. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins Of Technology-Skill Complementarity," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 693-732, August.
  9. Griliches, Zvi, 1969. "Capital-Skill Complementarity," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 465-68, November.
  10. Barry T. Hirsch & David A. MacPherson, 1993. "Union membership and coverage files from the Current Population Surveys: Note," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(3), pages 574-578, April.
  11. Dinardo, J.E. & Pischke, J.S., 1996. "The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?," Working papers 96-12, Massachusetts Institute of Technology (MIT), Department of Economics.
  12. Murphy, Kevin M & Welch, Finis, 1992. "The Structure of Wages," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 285-326, February.
  13. Jacob Mincer, 1991. "Human Capital, Technology, and the Wage Structure: What Do Time Series Show?," NBER Working Papers 3581, National Bureau of Economic Research, Inc.
  14. Haworth, C T & Rasmussen, David W, 1971. "Human Capital and Inter-Industry Wages in Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 53(4), pages 376-80, November.
  15. Berndt, Ernst R. & Morrison, Catherine J. & Rosenblum, Larry S., 1992. "High-tech capital formation and labor composition in U.S. manufacturing industries : an exploratory analysis," Working papers 3414-92., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  16. Henry S. Farber & Robert Gibbons, 1994. "Learning and Wage Dynamics," Working Papers 707, Princeton University, Department of Economics, Industrial Relations Section..
  17. 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.
  18. Dunne, Timothy & Schmitz, James A, Jr, 1995. "Wages, Employment Structure and Employer Size-Wage Premia: Their Relationship to Advanced-Technology Usage at US Manufacturing Establishments," Economica, London School of Economics and Political Science, vol. 62(245), pages 89-107, February.
  19. Bartel, Ann P & Sicherman, Nachum, 1998. "Technological Change and the Skill Acquisition of Young Workers," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 718-55, October.
  20. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
  21. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
  22. Bartel, Ann P & Lichtenberg, Frank R, 1987. "The Comparative Advantage of Educated Workers in Implementing New Technology," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 1-11, February.
  23. Mincer, Jacob & Higuchi, Yoshio, 1988. "Wage structures and labor turnover in the United States and Japan," Journal of the Japanese and International Economies, Elsevier, vol. 2(2), pages 97-133, June.
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