IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Power-Biased Technological Change and the Rise in Earnings Inequality

Author Info

Listed author(s):
  • Peter Skott

    ()

    (University of Massachusetts Amherst)

  • Frederick Guy

    ()

    (Birkbeck College)

Abstract

New information and communication technologies, we argue, have been 'power-biased': they have allowed firms to monitor low-skill workers more closely, thus reducing the power of these workers. An efficiency wage model shows that 'power-biased technical change' in this sense may generate rising wage inequality accompanied by an increase in both the effort and unemployment of low-skill workers. The skill-biased technological change hypothesis, on the other hand, offers no explanation for the observed increase in effort. JEL Categories: J31, O33

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.umass.edu/economics/publications/2005-17.pdf
Download Restriction: no

Paper provided by University of Massachusetts Amherst, Department of Economics in its series UMASS Amherst Economics Working Papers with number 2005-17.

as
in new window

Length:
Date of creation: Oct 2005
Handle: RePEc:ums:papers:2005-17
Contact details of provider: Postal:
Thompson Hall, Amherst, MA 01003

Phone: (413)545-2590
Fax: (413)545-2921
Web page: http://www.umass.edu/economics
Email:


More information through EDIRC

Keywords: power-biased technical change; skill bias; efficiency wages; wage inequality; work intensity;

Other versions of this item:

Find related papers by JEL classification:
  • 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

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window


  1. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
  2. Larry W. Hunter & John J. Lafkas, 2003. "Opening the Box: Information Technology, Work Practices, and Wages," ILR Review, Cornell University, ILR School, vol. 56(2), pages 224-243, January.
  3. Peter Skott, 2006. "Wage inequality and overeducation in a model with efficiency wages," Canadian Journal of Economics, Canadian Economics Association, vol. 39(1), pages 94-123, February.
  4. Freeman, Richard & Schettkat, Ronald, 2001. "Skill Compression, Wage Differentials, and Employment: Germany vs the US," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 582-603, July.
  5. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
  6. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 339-376.
  7. Francis Green, 2001. "It's Been A Hard Day's Night: The Concentration and Intensification of Work in Late Twentieth-Century Britain," British Journal of Industrial Relations, London School of Economics, vol. 39(1), pages 53-80, 03.
  8. Michael J. Handel & Maury Gittleman, 1999. "Is There a Wage Payoff to Innovative Work Practices?," Economics Working Paper Archive wp_288, Levy Economics Institute.
  9. Nickell, Stephen & Bell, Brian, 1996. "Changes in the Distribution of Wages and Unemployment in OECD Countries," American Economic Review, American Economic Association, vol. 86(2), pages 302-308, May.
  10. Eli Bekman & John Bound & Stephen Machin, 1998. "Implications of Skill-Biased Technological Change: International Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1245-1279.
  11. 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.
  12. Donald Katzner & Peter Skott, 2001. "Economic explanation, ordinality and the adequacy of analytic specification," Journal of Economic Methodology, Taylor & Francis Journals, vol. 11(4), pages 437-453.
  13. Francis Green & Steven McIntosh, 1998. "Union Power, Cost of Job Loss, and Workers' Effort," ILR Review, Cornell University, ILR School, vol. 51(3), pages 363-383, April.
  14. Bowles, Samuel, 1985. "The Production Process in a Competitive Economy: Walrasian, Neo-Hobbesian, and Marxian Models," American Economic Review, American Economic Association, vol. 75(1), pages 16-36, March.
  15. Bresnahan, Timothy F, 1999. "Computerisation and Wage Dispersion: An Analytical Reinterpretation," Economic Journal, Royal Economic Society, vol. 109(456), pages 390-415, June.
  16. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
  17. Rosemary Batt, 2001. "Explaining Wage Inequality in Telecommunications Services: Customer Segmentation, Human Resource Practices, and Union Decline," ILR Review, Cornell University, ILR School, vol. 54(2), pages 425-449, January.
  18. Skott, Peter, 2005. "Fairness as a source of hysteresis in employment and relative wages," Journal of Economic Behavior & Organization, Elsevier, vol. 57(3), pages 305-331, July.
  19. Gintis, Herbert & Ishikawa, Tsuneo, 1987. "Wages, work intensity, and unemployment," Journal of the Japanese and International Economies, Elsevier, vol. 1(2), pages 195-228, June.
  20. David Card & Francis Kramarz & Thomas Lemieux, 1999. "Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France," Canadian Journal of Economics, Canadian Economics Association, vol. 32(4), pages 843-877, August.
  21. Steve J. Davis & John Haltiwanger, 1991. "Wage Dispersion Between and Within U.S. Manufacturing Plants, 1963-1986," NBER Working Papers 3722, National Bureau of Economic Research, Inc.
  22. Skott, Peter & Auerbach, Paul, 2003. "Wage inequality and skill asymmetries," Economics Discussion Papers 2003-7, School of Economics, Kingston University London.
  23. Stephen A. Marglin, 1974. "What Do Bosses Do?," Review of Radical Political Economics, Union for Radical Political Economics, vol. 6(2), pages 60-112, July.
  24. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 367-397.
  25. Alfred D. Chandler, 1969. "Strategy and Structure: Chapters in the History of the American Industrial Enterprise," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262530090, July.
  26. Green, Francis & McIntosh, Steven, 2001. "The intensification of work in Europe," Labour Economics, Elsevier, vol. 8(2), pages 291-308, May.
  27. Hall, Peter A. & Soskice, David (ed.), 2001. "Varieties of Capitalism: The Institutional Foundations of Comparative Advantage," OUP Catalogue, Oxford University Press, number 9780199247752.
  28. John E. DiNardo & Jörn-Steffen Pischke, 1997. "The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 291-303.
  29. Leamer, Edward E, 1996. "Wage Inequality from International Competition and Technological Change: Theory and Country Experience," American Economic Review, American Economic Association, vol. 86(2), pages 309-314, May.
  30. Raquel Fernandez, 2001. "Education, Segregation and Marital Sorting: Theory and an Application to UK Data," NBER Working Papers 8377, National Bureau of Economic Research, Inc.
  31. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed the Labor Market?," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1169-1213.
  32. Francis Green, 2002. "Why Has Work Effort Become More Intense?," Studies in Economics 0207, School of Economics, University of Kent.
  33. Damian Grimshaw & Kevin G. Ward & Jill Rubery & Huw Beynon, 2001. "Organisations and the Transformation of the Internal Labour Market," Work, Employment & Society, British Sociological Association, vol. 15(1), pages 25-54, March.
  34. Entorf, Horst & Kramarz, Francis, 1997. "Does unmeasured ability explain the higher wages of new technology workers?," European Economic Review, Elsevier, vol. 41(8), pages 1489-1509, August.
Full references (including those not matched with items on IDEAS)

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Is the graduate premium falling?
    by chris dillow in Stumbling and Mumbling on 2009-01-28 14:23:06
  2. Brown on skills
    by chris dillow in Stumbling and Mumbling on 2007-11-26 16:12:59
  3. The Chigley politics of the living wage
    by chris dillow in Stumbling and Mumbling on 2012-11-05 14:40:27
  4. Immigration: let's not be reasonable
    by chris dillow in Stumbling and Mumbling on 2012-11-02 14:40:42
  5. Divide-and-rule
    by chris dillow in Stumbling and Mumbling on 2012-12-17 14:45:31
  6. What did tax cuts do?
    by chris dillow in Stumbling and Mumbling on 2014-02-06 14:14:51
  7. Wages as social constructs
    by chris in Stumbling and Mumbling on 2015-03-05 13:55:15
  8. Economists! Be more Marxist
    by chris in Stumbling and Mumbling on 2015-03-10 14:26:10
  9. Marx's relevance today
    by chris in Stumbling and Mumbling on 2015-10-25 13:02:50
  10. When newer isn't better
    by chris in Stumbling and Mumbling on 2016-09-08 13:43:26
  11. Against marginal product
    by chris in Stumbling and Mumbling on 2017-04-16 12:31:38
  12. Class, power & ideology
    by chris dillow in Stumbling and Mumbling on 2011-06-12 11:33:52
  13. Inequality & power
    by chris dillow in Stumbling and Mumbling on 2011-05-20 17:33:31
  14. Class matters
    by chris dillow in Stumbling and Mumbling on 2011-05-18 12:43:32
  15. Looks & earnings
    by chris dillow in Stumbling and Mumbling on 2011-05-16 15:23:21
  16. Innovation & market failure
    by chris dillow in Stumbling and Mumbling on 2011-05-04 12:11:54
  17. Economists as priests?
    by chris dillow in Stumbling and Mumbling on 2010-11-15 14:31:22
  18. Profits & top incomes
    by chris dillow in Stumbling and Mumbling on 2010-10-31 09:47:10
  19. Miliband on immigration
    by chris dillow in Stumbling and Mumbling on 2010-09-29 13:05:08
  20. Brown's class fetishism
    by chris dillow in Stumbling and Mumbling on 2009-12-05 12:35:22
  21. Bonuses, power and inequality
    by chris dillow in Stumbling and Mumbling on 2009-02-08 11:15:00
  22. Technology and inequality
    by chris dillow in Stumbling and Mumbling on 2006-10-04 13:37:48
  23. Chris Dillow: The Importance of Class
    by Mark Thoma in Economist's View on 2011-06-12 18:07:00
  24. 754. notes June 12
    by admin in Reflections on Gardenworld Politics on 2011-06-14 17:35:47
  25. Debuncification
    by chris dillow in Stumbling and Mumbling on 2012-12-28 14:35:29
  26. Why is the middle squeezed?
    by chris dillow in Stumbling and Mumbling on 2013-03-27 14:18:02
  27. Why real wages are falling
    by chris dillow in Stumbling and Mumbling on 2013-06-13 13:39:19
  28. Respect
    by chris dillow in Stumbling and Mumbling on 2013-12-31 13:45:07
  29. The left & immigration
    by chris dillow in Stumbling and Mumbling on 2014-05-27 13:08:37
  30. The Ukip question
    by chris dillow in Stumbling and Mumbling on 2014-10-10 13:26:59
  31. Heterodox economics & the left
    by chris in Stumbling and Mumbling on 2015-01-10 13:54:19
  32. Why not worker ownership?
    by chris in Stumbling and Mumbling on 2015-02-08 13:13:41
  33. Workplace surveillance
    by chris in Stumbling and Mumbling on 2016-01-21 14:18:13
  34. Whose racism?
    by chris in Stumbling and Mumbling on 2016-10-26 11:56:39
  35. Is globalization to blame?
    by chris in Stumbling and Mumbling on 2016-11-11 13:43:16
  36. Immigration & class struggle
    by chris in Stumbling and Mumbling on 2017-01-04 14:06:39
  37. Immigration mechanisms
    by chris in Stumbling and Mumbling on 2017-04-07 12:35:40
  38. The need for an immigration target
    by chris in Stumbling and Mumbling on 2017-05-09 12:20:17
  39. The ideology of "the market"
    by chris in Stumbling and Mumbling on 2017-07-22 12:00:29
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as
in new window


Cited by:

  1. Peter Skott & Frederick Guy, 2007. "Power, productivity and profits," UMASS Amherst Economics Working Papers 2007-02, University of Massachusetts Amherst, Department of Economics.
  2. Skott, Peter & Guy, Frederick, 2007. "A model of power-biased technological change," Economics Letters, Elsevier, vol. 95(1), pages 124-131, April.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Access and download statistics

When requesting a correction, please mention this item's handle: RePEc:ums:papers:2005-17. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Daniele Girardi)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.