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Power-Biased Technological Change and the Rise in Earnings Inequality

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  • 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

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

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Date of creation: Oct 2005
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Handle: RePEc:ums:papers:2005-17
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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

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Cited by:

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

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