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

  • Alberto Dalmazzo

    ()

  • Antonio Accetturo
  • 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, when technical progress is such to disproportionately replace middle-skill jobs, the local distribution of skill will exhibit “fat-tailsâ€, where the proportion of both highly skilled and low-skilled workers increases. These predictions are consistent with recent existing evidence.

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File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa12/e120821aFinal00290.pdf
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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa12p288.

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Date of creation: Oct 2012
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Handle: RePEc:wiw:wiwrsa:ersa12p288
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  1. 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.
  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. 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.
  4. 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.
  5. Edward L. Glaeser & Joshua D. Gottlieb, 2008. "The Economics of Place-Making Policies," NBER Working Papers 14373, National Bureau of Economic Research, Inc.
  6. David Autor & Frank Levy & Richard Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
  7. Jan Eeckhout & Roberto Pinheiro & Kurt Schmidheiny, 2014. "Spatial Sorting," Journal of Political Economy, University of Chicago Press, vol. 122(3), pages 554 - 620.
  8. Daron Acemoglu, 2002. "Directed Technical Change," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 781-809.
  9. Gerald Carlino, 2009. "Beautiful city," Business Review, Federal Reserve Bank of Philadelphia, issue Q3, pages 10-17.
  10. Van Reenen, John, 2011. "Wage inequality, technology and trade: 21st century evidence," Labour Economics, Elsevier, vol. 18(6), pages 730-741.
  11. Daron Acemoglu, 2003. "Labor- And Capital-Augmenting Technical Change," Journal of the European Economic Association, MIT Press, vol. 1(1), pages 1-37, 03.
  12. Christopher R. Berry & Edward L. Glaeser, 2005. "The Divergence of Human Capital Levels Across Cities," NBER Working Papers 11617, National Bureau of Economic Research, Inc.
  13. 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.
  14. Christopher R. Berry & Edward L. Glaeser, 2005. "The divergence of human capital levels across cities," Papers in Regional Science, Wiley Blackwell, vol. 84(3), pages 407-444, 08.
  15. Eeckhout, Jan & Pinheiro, Roberto & Schmidheiny, Kurt, 2010. "Spatial Sorting: Why New York, Los Angeles and Detroit attract the greatest minds as well as the unskilled," CEPR Discussion Papers 8151, C.E.P.R. Discussion Papers.
  16. Glaeser, Edward L., 2008. "Cities, Agglomeration, and Spatial Equilibrium," OUP Catalogue, Oxford University Press, number 9780199290444, March.
  17. Jeffrey Lin, 2011. "Technological Adaptation, Cities, and New Work," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 554-574, May.
  18. 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.
  19. 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.
  20. 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.
  21. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
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