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Skill Polarization in Local Labour Markets under Share-Altering Technical Change

  • Antonio accetturo

    ()

  • Alberto Dalmazzo

    ()

  • Guido De Blasio

    ()

This paper considers the “share-altering” technical change hypothesis in a spatial general equilibrium model where individuals have different levels of skills. Building on a simple Cobb-Douglas production function, our model shows that the implementation of skill-biased technologies requires a sufficient proportion of highly educated individuals. Moreover, areas that experiment this kind of technical change will initially exhibit a rise in local skill premia, but such a trend tends to be reverted over time due to labour mobility. Also, when technical progress is such to disproportionately replace middle-skill jobs, the local distribution of skill will exhibit “fat-tails”, where the proportion of both highly skilled and low-skilled workers increases. These predictions are consistent with recent existing evidence.

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Paper provided by Department of Economics, University of Siena in its series Department of Economics University of Siena with number 625.

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Date of creation: Nov 2011
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Handle: RePEc:usi:wpaper:625
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  1. Daron Acemoglu, 2003. "Labor- And Capital-Augmenting Technical Change," Journal of the European Economic Association, MIT Press, vol. 1(1), pages 1-37, 03.
  2. Autor, David & Dorn, David, 2009. "This Job Is 'Getting Old:' Measuring Changes in Job Opportunities Using Occupational Age Structure," IZA Discussion Papers 3970, Institute for the Study of Labor (IZA).
  3. Hernando Zuleta, 2008. "Factor Saving Innovations and Factor Income Shares," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 836-851, October.
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  7. Guy Michaels & Ashwini Natraj & John Van Reenen, 2010. "Has ICT Polarized Skill Demand? Evidence from Eleven Countries over 25 Years," CEP Discussion Papers dp0987, Centre for Economic Performance, LSE.
  8. John Van Reenen, 2011. "Wage inequality, technology and trade: 21st Century evidence," LSE Research Online Documents on Economics 47494, London School of Economics and Political Science, LSE Library.
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  10. Jeffrey Lin, 2009. "Technological adaptation, cities and new work," Working Papers 09-17, Federal Reserve Bank of Philadelphia.
  11. Glaeser, Edward L., 2008. "Cities, Agglomeration, and Spatial Equilibrium," OUP Catalogue, Oxford University Press, number 9780199290444, March.
  12. Acemoglu, D., 1997. "Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality," Working papers 97-14, Massachusetts Institute of Technology (MIT), Department of Economics.
  13. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
  14. Edward L. Glaeser & Joshua D. Gottlieb, 2008. "The Economics of Place-Making Policies," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 155-253.
  15. Jan Eeckhout & Roberto Pinheiro & Kurt Schmidheiny, 2013. "Spatial sorting," IFS Working Papers W13/18, Institute for Fiscal Studies.
  16. Jan Eeckhout & Roberto Pinheiro & Kurt Schmidheiny, 2010. "Spatial Sorting: Why New York, Los Angeles and DetroitAttract the Greatest Minds as well as the Unskilled," CESifo Working Paper Series 3274, CESifo Group Munich.
  17. Gerald Carlino, 2009. "Beautiful city," Business Review, Federal Reserve Bank of Philadelphia, issue Q3, pages 10-17.
  18. Maarten Goos & Alan Manning, 2007. "Lousy and Lovely Jobs: The Rising Polarization of Work in Britain," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 118-133, February.
  19. Roback, Jennifer, 1988. "Wages, Rents, and Amenities: Differences among Workers and Regions," Economic Inquiry, Western Economic Association International, vol. 26(1), pages 23-41, January.
  20. Christopher R. Berry & Edward L. Glaeser, 2005. "The Divergence of Human Capital Levels across Cities," Harvard Institute of Economic Research Working Papers 2091, Harvard - Institute of Economic Research.
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