Non-routine tasks, restructuring of firms, and wage inequality within and between skill-groups

Abstract

This paper argues that endogenous restructuring processes within firms towards analytical and interactive non-routine tasks (like problem-solving and organizational activities, respectively), triggered by advances in information and communication technologies (ICT) and rising supply of educated workers, are associated with an increase of wage inequality within education groups. We show that this may be accompanied by a decline or stagnation of between-group wage dispersion. The mechanisms proposed in this research are not only consistent with the evolution of the distribution of wages in advanced countries, but also with the evolution of task composition in firms and a frequently confirmed complementarity between skill-upgrading, new technologies and knowledge-based work organization.