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The double role of skilled labor, new technologies and wage inequality


Egger, H; Grossmann, V (2005). The double role of skilled labor, new technologies and wage inequality. Metroeconomica, 56(1):37-57.

Abstract

We examine the relationship between the supply of skilled labor, technological change and relative wages. In accounting for the role of skilled labor in both production activities and productivity- enhancing "support" activities we derive the following results. First, an increase in the supply of skilled labor raises the employment share of non-production labor within firms, without lowering relative wages. Second, new technologies raise wage inequality only in so far as they give incentives to firms to reallocate skilled labor towards non-production activities. In contrast, skill-biased technological change of the sort usually considered in the literature does not affect wage inequality.

We examine the relationship between the supply of skilled labor, technological change and relative wages. In accounting for the role of skilled labor in both production activities and productivity- enhancing "support" activities we derive the following results. First, an increase in the supply of skilled labor raises the employment share of non-production labor within firms, without lowering relative wages. Second, new technologies raise wage inequality only in so far as they give incentives to firms to reallocate skilled labor towards non-production activities. In contrast, skill-biased technological change of the sort usually considered in the literature does not affect wage inequality.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:2005
Deposited On:30 Apr 2008 08:21
Last Modified:05 Apr 2016 12:23
Publisher:Wiley-Blackwell
ISSN:0026-1386
Additional Information:The definitive version is available at www.blackwell-synergy.com
Publisher DOI:10.1111/j.1467-999X.2005.00206.x
Permanent URL: http://doi.org/10.5167/uzh-2450

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