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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

Suggested Citation

  • Peter Skott & Frederick Guy, 2005. "Power-Biased Technological Change and the Rise in Earnings Inequality," UMASS Amherst Economics Working Papers 2005-17, University of Massachusetts Amherst, Department of Economics.
    • Handle: RePEc:ums:papers:2005-17
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    Citations

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    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. Francis Green, 2008. "Leeway for the Loyal: A Model of Employee Discretion," British Journal of Industrial Relations, London School of Economics, vol. 46(1), pages 1-32, March.
    3. Skott, Peter & Guy, Frederick, 2007. "A model of power-biased technological change," Economics Letters, Elsevier, vol. 95(1), pages 124-131, April.

    More about this item

    Keywords

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

    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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