Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles

Dylan Matthews has a nice post on the inequality & skill biased technical change debate between David Autor, who is one of my favorite labor economists, and some folks at EPI.

I wanted to highlight this paper by David Card and John DiNardo that goes through some problems and puzzles for the skill biased technical change story. Here’s how they conclude:

Our main conclusion is that, contrary to the impression conveyed by most of the recent literature, the SBTC hypothesis falls short as a unicausal explanation for the evolution of the U.S. wage structure in the 1980s and 1990s. Indeed, we find puzzles and problems for the theory in nearly every dimension of the wage structure. This is not to say that we believe technology was fixed over the past 30 years or that recent technological changes have had no effect on the structure of wages. There were many technological innovations in the 1970s, 1980s, and 1990s, and it seems likely that these changes had some effect on relative wages. Rather, we argue that the SBTC hypothesis by itself is not particularly helpful in organizing or understanding the shifts in the structure of wages that have occurred in the U.S. labor market. Based on our reading of the evidence, we believe it is time to reevaluate the case that SBTC offers a satisfactory explanation for the rise in U.S. wage inequality in the last quarter of the twentieth century. 

About ozidar

I'm an Assistant Professor of Economics at the University of Chicago Booth School of Business and a Faculty Research Fellow at National Bureau of Economic Research. You can follow me on twitter @omzidar.
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3 Responses to Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles

  1. Owen,

    I teach personal finance to over 500 students per year at the University of Arizona, and over 50,000 per year as the founder of two licensed providers of a personal finance course required for people in bankruptcy. What I’m interested in is the future, and what occupations will be safe (or relatively safe) in a world that looks like it will be extremely risky and dangerous with regard to personal and family financial security, even compared to today.

    For example, today medical doctor is the king of personal financial security, unemployment for more than a short time is virtually impossible, and the income is very high. But in the future, Watson plus well trained nurses may displace a large percentage of doctors. What will be safe (or a lot safer) in the future? And a long term future as a pilot for a young person doesn’t look good. What are good game plans for young people that can really work to not be at constant risk of financial devastation for your family? It is this kind of futurenomics that I’m very interested in. Does anyone at all research this very important area? Can you cite any books or papers?

  2. ozidar says:

    Reblogged this on owenzidar and commented:

    Thought this was worth pulling out of the archives.

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