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Changes in Between-Group Inequality: Computers, Occupations, and International Trade

Author

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  • Ariel Burstein
  • Eduardo Morales
  • Jonathan Vogel

Abstract

We provide a unifying framework to quantify the impact of several determinants of changes in US between-group inequality. We use an assignment framework with many labor groups, equipment types, and occupations in which changes in inequality are driven by changes in workforce composition, occupation demand, computerization, and labor productivity. We parameterize the model using direct measures of computer usage within labor group-occupation pairs and quantify the impact of each shock for various dimensions of between-group inequality between 1984 and 2003. We find, for example, that computerization and shifts in occupation demand jointly account for roughly 80 percent of the rise in the skill premium, with computerization alone accounting for roughly 60 percent. In an open-economy extension of the model, we show how computerization and changes in occupation demand can be caused by changes in the extent of international trade and perform counterfactual exercises to quantify these effects.

Suggested Citation

  • Ariel Burstein & Eduardo Morales & Jonathan Vogel, 2019. "Changes in Between-Group Inequality: Computers, Occupations, and International Trade," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(2), pages 348-400, April.
    • Handle: RePEc:aea:aejmac:v:11:y:2019:i:2:p:348-400
    Note: DOI: 10.1257/mac.20170291
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    Citations

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    Cited by:

    1. Ricardo Reyes-Heroles & Sharon Traiberman & Eva Van Leemput, 2020. "Emerging Markets and the New Geography of Trade: The Effects of Rising Trade Barriers," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 68(3), pages 456-508, September.
    2. Hiroya Taniguchi & Ken Yamada, 2020. "The Race between Technology and Woman: Changes in Gender and Skill Premia in OECD Countries," Papers 2005.12600, arXiv.org, revised Feb 2024.
    3. Arvai Kai & Mann Katja, 2022. "Consumption Inequality in the Digital Age," Working papers 890, Banque de France.
    4. Laura A Harvey & James Rockey, 2020. "The declining fortunes of (most) American workers," University of East Anglia School of Economics Working Paper Series 2020-04, School of Economics, University of East Anglia, Norwich, UK..
    5. Arvai, Kai & Mann, Katja, 2022. "Consumption Inequality in the Digital Age," VfS Annual Conference 2022 (Basel): Big Data in Economics 264001, Verein für Socialpolitik / German Economic Association.
    6. Agnes Norris Keiller, 2020. "Detecting labour submarkets from worker-mobility networks: a preliminary study," IFS Working Papers W20/30, Institute for Fiscal Studies.
    7. Zhang, Yi & Kumar, Sanjay & Huang, Xianhai & Yuan, Yiming, 2023. "Human capital quality and the regional economic growth: Evidence from China," Journal of Asian Economics, Elsevier, vol. 86(C).
    8. Hassan, Fadi & Esposito, Federico, 2023. "Import Competition, Trade Credit, and Financial Frictions in General Equilibrium," CEPR Discussion Papers 17926, C.E.P.R. Discussion Papers.
    9. repec:ecb:ecbdps:202323 is not listed on IDEAS
    10. Seibold, Arthur & Sauré, Philip & Smorodenkova, Elizaveta & Zoabi, Hosny, 2023. "Occupations Shape Retirement Across Countries," CEPR Discussion Papers 18161, C.E.P.R. Discussion Papers.
    11. Esposito, Federico & Hassan, Fadi, 2023. "Import competition, trade credit and financial frictions in general equilibrium," LSE Research Online Documents on Economics 121378, London School of Economics and Political Science, LSE Library.
    12. Rodrigo Adão & Costas Arkolakis & Federico Esposito, 2019. "General Equilibrium Effects in Space: Theory and Measurement," NBER Working Papers 25544, National Bureau of Economic Research, Inc.
    13. Ryan Kim & Jonathan Vogel, 2020. "Trade and Welfare (Across Local Labor Markets)," NBER Working Papers 27133, National Bureau of Economic Research, Inc.
    14. Dengler, Katharina & Hiesinger, Karolin & Tisch, Anita, 2022. "Digital transformation: The role of computer use in employee health," Economics & Human Biology, Elsevier, vol. 46(C).
    15. Díaz, Carlos & Dodel, Matías & Menese, Pablo, 2022. "Can one laptop per child reduce digital inequalities? ICT household access patterns under Plan Ceibal," Telecommunications Policy, Elsevier, vol. 46(9).
    16. Daron Acemoglu & Pascual Restrepo, 2022. "Tasks, Automation, and the Rise in U.S. Wage Inequality," Econometrica, Econometric Society, vol. 90(5), pages 1973-2016, September.
    17. Hudomiet, Péter & Willis, Robert J., 2022. "Computerization, obsolescence and the length of working life," Labour Economics, Elsevier, vol. 77(C).
    18. Florent Bordot & Andre Lorentz, 2021. "Automation and labor market polarization in an evolutionary model with heterogeneous workers," LEM Papers Series 2021/32, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    19. Dedola, Luca & Ehrmann, Michael & Hoffmann, Peter & Lamo, Ana & Paz-Pardo, Gonzalo & Slacalek, Jiri & Strasser, Georg, 2023. "Digitalisation and the economy," Working Paper Series 2809, European Central Bank.
    20. Gaelan MacKenzie, 2021. "Trade and Market Power in Product and Labor Markets," Staff Working Papers 21-17, Bank of Canada.
    21. Bhalotra, Sonia R & Fernández, Manuel & Wang, Fan, 2022. "The distribution of the gender wage gap : An equilibrium model," CAGE Online Working Paper Series 614, Competitive Advantage in the Global Economy (CAGE).
    22. Lee, Eunhee, 2020. "Trade, inequality, and the endogenous sorting ofheterogeneous workers," Journal of International Economics, Elsevier, vol. 125(C).
    23. David Jose Jaume, 2017. "The Labor Market Effects of an Educational Expansion. A Theoretical Model with Applications to Brazil," 2017 Papers pja468, Job Market Papers.
    24. Nicolas A. Roys & Christopher R. Taber, 2019. "Skill Prices, Occupations, and Changes in the Wage Structure for Low Skilled Men," NBER Working Papers 26453, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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