Search results

The purpose of this paper is to develop a theoretical model to explore the economic consequences of an exogenous skill‐biased technological change.

The paper develops a theoretical model based on assumptions and conditions that replicate those of a government‐sponsored poverty reduction programme in India.

The paper finds that, under certain stated conditions, wage inequality between artisans with improved toolkits and those without is likely to increase, while, under a different set of conditions, this is likely to decrease.

Actual wage inequality implications of specific exogenous skill‐biased technological changes need to be studied to take the theoretical model further.

One major implication is that, when government help is provided by way of an exogenous skill‐biased technological change to a fraction of workers, it may have the unintended consequence of increasing wage inequality between the beneficiary and the non‐beneficiary workers. In extreme cases, it may even lower the equilibrium wages of the non‐beneficiary workers.

The paper brings out the critical role of efficiency units of workers with skill‐biased technology (artisans with improved toolkits) and those without these in determining the wage inequality between these categories of workers (artisans) based on a theoretical model of the trajectory along which the rural economy moves.

Wages have been spreading out across workers over time – or in other words, the 90th/50th wage ratio has risen over time. A key question is, has the productivity distribution also spread out across worker skill levels over time? Using our calculations of productivity by skill level for the United States, we show that the distributions of both wages and productivity have spread out over time, as the right tail lengthens for both. We add Organization for Economic Co-Operation and Development (OECD) countries, showing that the wage–productivity correlation exists, such that gains in aggregate productivity, or GDP per person, have resulted in higher wages for workers at the top and bottom of the wage distribution. However, across countries, those workers in the upper-income ranks have seen their wages rise the most over time. The most likely international factor explaining these wage increases is the skill-biased technological change of the digital revolution. The new artificial intelligence (AI) revolution that has just begun seems to be having similar skill-biased effects on wages. But this current AI, called “supervised learning,” is relatively similar to past technological change. The AI of the distant future will be “unsupervised learning,” and it could eventually have an effect on the jobs of the most highly skilled.

The dissolving trade barriers, financial deregulation, hyper‐mobility of capital and the rapid diffusion of new information technologies have ushered the Australian economy into the borderless world. The orthodoxy that states that centralised wage‐fixing in Australia has impeded wage flexibility and resulted in high unemployment is unconvincing. Partly, this is because in the 1980s Australian labour market institutions have been decentralised and decollectivised in response to pressures from the borderless world. The insights garnered from cross‐sectional comparative statics that, first, skill‐biased Schumpeterian technological change was the major cause of labour immiserisation and, second, adverse Stolper‐Samuelson trade played an insignificant effect need to be reviewed. Parsimonious dynamic time‐series models of trade and technology have been formulated using general‐to‐specific methods after taking account of stochastic trends through unit root and cointegration tests. Granger causality and non‐nested tests applied to these models support the contention that both trade and technology contributed to increasing wage disparity during the borderless era. Moreover the supply side factors such as female participation, immigration and institutional factors such as deunionisation have also increased wage disparity. The deregulation of the Australian labour market by the Workplace Relations Act, whilst an inevitable response to achieve competitiveness in the borderless world market, would exacerbate wage inequality. Policies aimed at skill accumulation on the one hand, and social welfare policies involving negative income taxes on the other may have to be implemented to mitigate the deleterious social effects of rising wage inequality.

The purpose of this paper is to focus on the impact of trade openness and technology import on the change in demand structure of employment toward skilled workers. Because of the limited number of empirical papers done in the case of Tunisia, this research investigates whether these factors had similar effects on relative labor demand in Tunisia to those observed in the international literature.

For this purpose, the paper uses a manufacturing industries database provided by the Tunisian National Institute, the Quantitative Economic Institute and Comtrade of United Nations for six manufacturing industries. The methodology used here is a panel data technique, and consists of estimating a dynamic relative employment equation.

Empirical results show that trade liberalization and technology change positively affect relative employment of Tunisian manufacturing industries which confirms the existence of skill biased technological change that contributes to increase the relative demand for skilled workers.

The paper adds to existing literature by studying for the first time the case of Tunisian manufacturing industries by using dynamic model. The paper deals also with an econometrics issues related to the use of suitable estimation methodology in the case of dynamic panel data at macroeconomics level.

This article studies the evolution of the wage differentials between graduate (skilled) and non-graduate (unskilled) workers in several European countries from the beginning of the 1990s to the beginning of this century. The starting point is that all European countries show a common increase in the relative supply of skilled workers but different evolution of wage differentials. Economics theory usually relates the evolution of wage differentials not only to relative supply but also to skill-biased technological progress. I complement this explanation providing a theoretical model of wage bargaining where wage differentials are determined also by labour market institutions. My empirical findings show that both technological progress and labour market institutions are important in the determination of wage differentials. As for the former, I find that differentials depend on the pace and intensity at which technological progress takes place. As for labour market institutions, their effect, though important, is not always straightforward. In fact, some aspects of institutions, like minimum wage and the duration of unemployment benefits, favour unskilled workers while other aspects, like bargaining power and replacement rates from unemployment benefits, may magnify the differences in outside options and actually increase wage differentials.

The purpose of this paper is to investigate the determinants of R&D investment at the level of the firm.

A balanced panel of 215 Italian manufacturing firms over the 1995‐2000 period has been used to test the technology‐push, the demand‐pull and the endogenous skill‐bias hypotheses. Econometrically, both the GMM‐SYS estimator and the Least Squares Dummy Variable Corrected (LSDVC) estimator (a recently‐proposed panel data technique particularly suitable for small samples) have been used.

Results support the well‐established technology‐push and demand‐pull hypotheses and, furthermore, supply evidence for the role of skill endowment in increasing a firm's R&D investments.

A limitation of the study concerns the measure of skills which is here, as in previous economic literature, simply the ratio between productive (blue‐collar) and non‐productive (white‐collar) workers. Another limitation of this contribution concerns its limited generalisability: data come from relatively large Italian manufacturing firms, i.e. the service sector and SMEs are not considered.

Consistently with the related managerial and economic literature, the basic result is that current skill endowment may significantly and positively influence a firm's current R&D decision; therefore, adequate education and training policies may indirectly induce an increase in corporate R&D investment. In terms of managerial implications, this means that HRM may be seen as an indirect strategy for improving a firm's R&D effort and ultimately for improving its performance through innovation.

While there is a well‐established literature investigating the so‐called Skill Biased Technological Change, few microeconomic empirical studies have been devoted to test the reverse relationship. The paper aims to fill this gap, testing whether higher skills may induce higher R&D expenditures.

There has been a period of slow but a steady increase in wage inequality in the Indian manufacturing sector since the mid‐1980s, which has gone hand‐in‐hand with an increase in the relative employment of skilled workers across all industries in the same period. The purpose of this paper is to investigate whether the co‐movement of relative employment and wages of skilled workers can be attributed to the changes in trade policy that has occurred in the Indian economy since the mid‐1980s.

The two dominant theoretical perspectives on why trade reforms lay lead to wage inequality are Heckscher–Ohlin theory and trade‐induced skill‐biased technological change (SBTC). The paper evaluates the applicability of these theoretical perspectives to the Indian case using disaggregated industry data from Annual Survey of Industries from 1973 to 1997.

Evidence was found of the validity of both the two dominant theoretical perspectives on wage inequality to explain the co‐movement in wage inequality and relative skill intensity in Indian manufacturing, with both variables increasing in the 1990s. Trade‐induced technological progress has led to an increase in relative skill intensity and wage inequality within industries. At the same time, the decline in protection that seems to have occurred more in unskilled labour‐intensive industries has led to a relative fall in the economy‐wide return to unskilled labour relative to skilled labour. Therefore, trade reforms have led to a widening of wage gap between skilled and unskilled workers, and an increase in relative skill intensity in Indian manufacturing.

The paper contributes to support of the trade‐induced SBTC hypothesis which may provide a consistent explanation of why many countries in the south experienced increases in wage inequality with the onset of trade liberalisation.

We analyze the evolution of the gender wage gap in Mexico between 1989 and 2012, a period in which skill-biased technological change accelerated. We deviate from most prior work investigating the gap across the wage distribution. We find substantial gender wage convergence in the decade of the 2000s at the mean and, more markedly, at the upper and lower ends of the wage distribution, alongside little change in the median wage gap. The gender wage gap at the 90th percentile was largely eliminated by the year 2012 and, at the 10th percentile, it narrowed by a fourth of its 1990 level. This narrowing of gender inequality in wages occurred alongside a narrowing of inequality in wages within each gender group. The share of college-educated women relative to men in the work force grew substantially over the two decades, and they sorted disproportionately into brain-intensive occupations, where the gender wage gap fell sharply. The wage return to being in a brain-intensive occupation was, in both periods, greater for women; it declined for men while rising for women during the 2000s. Our findings demonstrate how structural economic change may interact with a biologically premised comparative advantage of women in brain-intensive occupations to raise their relative wages. Our results also underline the relevance of studying changes across the wage distribution.

Purpose – This chapter analyzes the effects that the international integration of product markets induced by globalization exerts on the direction of technological change at the industry level.

Methodology/approach – In order to do so it elaborates an interpretative framework that complements the classical inducement hypotheses with the Schumpeterian literature and the localized technological change approach, putting forward the hypothesis that technological change is biased by the dynamics of both factor and product markets. We argue and show that not only the changing levels of input costs but also the changing prevalence of product and process innovations affect the direction of technological change: specifically when product innovations prevail technological change is skill-biased, while when process innovations play a major role innovation is capital intensive.

Findings – Following this perspective we analyze the interindustrial variance of the output elasticities of labor of the main advanced economies in recent years and claim that such heterogeneity can be understood as the result of differentiated innovative reactions of firms to changes induced by the globalization of the markets: fast-growing sectors innovate mainly through (skilled) labor-augmenting technological change, while mature industries rely more on capital-enhancing innovations. The empirical evidence supports our hypotheses and shows that the variance of the output elasticity of labor in a panel data estimate across 17 manufacturing sectors in 16 OECD countries from 1995 to 2006, is significantly and positively associated with the rates of growth of employment, wage levels and their rates of increase, and R&D intensity.

Originality/value of paper – By investigating the variance of output elasticities at the industry level the chapter provides new insights within the literature focused on the bias of technological change.