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643
Technical Change, Inequality, and The Labor Market
- Journal of Economic Literature
, 2002
"... This essay discusses the effect of technical change on wage inequality. I argue that the behavior of wages and returns to schooling indicates that technical change has been skill-biased during the past sixty years. Furthermore, the recent increase in inequality is most likely due to an acceleration ..."
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Cited by 425 (6 self)
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This essay discusses the effect of technical change on wage inequality. I argue that the behavior of wages and returns to schooling indicates that technical change has been skill-biased during the past sixty years. Furthermore, the recent increase in inequality is most likely due to an acceleration in skill bias. In contrast to twentiethcentury developments, much of thr technical change during the early nineteenth century appears to be skill-replacing. I suggest that this is because the increased supply of unskilled workers in the English cities made the introduction of these technologies profitable. On the other hand, the twentieth century has been characterized by skillbiased technical change because the rapid increase in the supply of skilled workers has induced the development of skill-complementary technologies. The recent acceleration in skill bias is in turn likely to have been a response to the acceleration in the supply of skills during the past several decades.
Increasing Residual Wage Inequality: Composition Effects, Noisy Data, or Rising Demand for Skill?
, 2006
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Trading Tasks: A Simple Theory of Offshoring
- American Economic Review
"... We propose a theory of the global production process that focuses on tradeable tasks, and use it to study how falling costs of offshoring affect factor prices in the source country. We identify a productivity effect of task trade that benefits the factor whose tasks are more easily moved offshore. I ..."
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Cited by 169 (3 self)
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We propose a theory of the global production process that focuses on tradeable tasks, and use it to study how falling costs of offshoring affect factor prices in the source country. We identify a productivity effect of task trade that benefits the factor whose tasks are more easily moved offshore. In the light of this effect, reductions in the cost of trading tasks can generate shared gains for all domestic factors, in contrast to the distributional conflict that typically results from reductions in the cost of trading goods. (JEL F11, F16) The nature of international trade is changing. For centuries, trade mostly entailed an exchange of goods. Now it increasingly involves bits of value being added in many different locations, or what might be called trade in tasks. Revolutionary advances in transportation and communications technology have weakened the link between labor specialization and geographic concentration, making it increasingly viable to separate tasks in time and space. When instructions can be delivered instantaneously, components and unfinished goods can be moved quickly and cheaply, and the output of many tasks can be conveyed electronically, firms can take advantage of factor cost disparities in different countries without sacrificing the gains from specialization. The result
Labor- and Capital-Augmenting Technical Change
, 2000
"... I analyze an economy in which pro...t-maximizing ...rms can undertake both laboror capital-augmenting technological improvements. In the long run, the economy looks like the standard growth model with purely labor-augmenting technical change, and the share of labor in GDP is constant. Along the tran ..."
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Cited by 153 (7 self)
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I analyze an economy in which pro...t-maximizing ...rms can undertake both laboror capital-augmenting technological improvements. In the long run, the economy looks like the standard growth model with purely labor-augmenting technical change, and the share of labor in GDP is constant. Along the transition path, however, there is capitalaugmenting technical change and factor shares change. A range of policies may have counterintuitive implications due to their eect on the direction of technical change. For example, taxes on capital income reduce the labor share in the short run, but increase it in the medium/long run. Keywords: Economic Growth, Endogenous Growth, Factor Shares, Technical Change. JEL Classi...cation: O33, O14, O31, E25. I thank Manuel Amador, Abhijit Banarjee, Olivier Blanchard, and Jaume Ventura for useful comments. y Massachusetts Institute of Technology, Department of Economics, E52-371, Cambridge, MA 02319; e-mail: daron@mit.edu 1 I.
Beyond Incentive Pay: Insiders’ Estimates of the Value of Complementary Human Resource Management Practices
- Journal of Economic Perspectives
, 2003
"... Economists have written extensively on this question, often focusing on various types of incentive pay contracts aimed at eliciting greater effort from employees. This theoretical research identifies features of employment relationships that limit the effectiveness of simple piece-rate incentive pay ..."
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Cited by 126 (4 self)
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Economists have written extensively on this question, often focusing on various types of incentive pay contracts aimed at eliciting greater effort from employees. This theoretical research identifies features of employment relationships that limit the effectiveness of simple piece-rate incentive pay plans and that force managers to consider other forms of incentive pay. In addition, managers introduce other human resource management practices, concerning employee training, hiring criteria, teamwork, job design, and employee hierarchies, that are aimed at eliciting optimal performance (see reviews in Gibbons, 1998; Gibbons and Waldman, 1999; Lazear, 1999; Murphy, 1999; and Prendergast, 1999). Still, without empirical evidence on businesses ’ human resource practices, it will remain an open question whether the theories proposed in “personnel economics [are] real or merely a series of clever models proposed by abstract thinkers who have little contact with reality ” (Lazear, 1999). In this study, we describe a new research approach – an approach we label “insider econometrics ” – that is aimed at producing empirical estimates of the value of alternative human resource management practices. This “insider ” approach goes deep
Lousy and Lovely Jobs: The Rising Polarization of Work in Britain, The Review of Economics and Statistics
, 2007
"... exhibited a pattern of job polarization with rises in employment shares in the highest- and lowest-wage occupations. This is not entirely consistent with the idea of skill-biased technical change as a hypothesis about the impact of technology on the labor market. We argue that the “routiniza-tion ” ..."
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Cited by 98 (0 self)
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exhibited a pattern of job polarization with rises in employment shares in the highest- and lowest-wage occupations. This is not entirely consistent with the idea of skill-biased technical change as a hypothesis about the impact of technology on the labor market. We argue that the “routiniza-tion ” hypothesis recently proposed by Autor, Levy, and Murnane (2003) is a better explanation of job polarization, though other factors may also be important. We show that job polarization can explain one-third of the rise in the log(50/10) wage differential and one-half of the rise in the log(90/ 50). I.
Age and individual productivity: A literature survey
- Vienna Yearbook of Population Research
, 2004
"... This article surveys supervisors ’ ratings, analyses of piece-rates and em-ployer-employee datasets as well as other approaches used to estimate how individ-ual productivity varies with age. The causes of productivity variations over the life cycle are addressed with an emphasis on how cognitive abi ..."
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Cited by 92 (3 self)
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This article surveys supervisors ’ ratings, analyses of piece-rates and em-ployer-employee datasets as well as other approaches used to estimate how individ-ual productivity varies with age. The causes of productivity variations over the life cycle are addressed with an emphasis on how cognitive abilities affect labour market performance. Earnings tend to increase until relative late in the working life, while most evidence suggests that individuals’job performance tends to increase in the first few years of one’s entry into the labour market, before it stabilises and often de-creases towards the end of one’s career. Productivity reductions at older ages are par-ticularly strong when problem solving, learning and speed are important, while older individuals maintain a relatively high productivity level in work tasks where experience and verbal abilities matter more. 1
Leadership Skills and Wages
- JOURNAL OF LABOR ECONOMICS
, 2001
"... American business seems to be infatuated with its workers’ “leadership ” skills. Is there such a thing, and is it rewarded in labor markets? Using the Project Talent, NLS72 and High School and Beyond datasets, we show that men who occupied leadership positions in high school earn more as adults, eve ..."
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Cited by 68 (1 self)
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American business seems to be infatuated with its workers’ “leadership ” skills. Is there such a thing, and is it rewarded in labor markets? Using the Project Talent, NLS72 and High School and Beyond datasets, we show that men who occupied leadership positions in high school earn more as adults, even when cognitive skills are held constant. The pure leadership-wage effect varies from four percent for a broad definition of leadership in 1971 to twenty-four percent for a narrow definition in 1992, and appears to have increased over time. High-school leaders are more likely to occupy managerial occupations as adults, and leadership skills command a higher wage premium within managerial occupations than other jobs. We find evidence that leadership skill has a component that is determined before high school, but also find evidence that it is “teachable”.
OFFSHORING IN A KNOWLEDGE ECONOMY
, 2006
"... How does the formation of cross-country teams affect the organization of work and the structure of wages? To study this question, we propose a theory of the assignment of heterogeneous agents into hierarchical teams, where less skilled agents specialize in production and more skilled agents speciali ..."
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Cited by 60 (6 self)
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How does the formation of cross-country teams affect the organization of work and the structure of wages? To study this question, we propose a theory of the assignment of heterogeneous agents into hierarchical teams, where less skilled agents specialize in production and more skilled agents specialize in problem solving. We first analyze the properties of the competitive equilibrium of the model in a closed economy, and show that the model has a unique and efficient solution. We then study the equilibrium of a two-country model (North and South), where countries differ in their distributions of ability, and in which agents in different countries can join together in teams. We refer to this type of integration as globalization. Globalization leads to better matches for all southern workers but only for the best northern workers. As a result, we show that globalization increases wage inequality among nonmanagers in the South, but not necessarily in the North. We also study how globalization affects the size distribution of firms and the patterns of consumption and trade in the global economy.