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Evidence on wage inequality, worker education, and technology

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  • Christopher H. Wheeler

Abstract

The rise in U.S. wage inequality over the past two decades is commonly associated with an increase in the use of \\"skill-biased\\" technologies (e.g., computer equipment) in the workplace, yet relatively few studies have attempted to measure the direct link between the two. This paper explores the relationship among inequality, worker education levels, and workplace computer usage using a sample of 230 U.S. industries between 1983 and 2002. The results generate two primary conclusions: First, this rising inequality in the United States has been caused predominantly by increasing wage dispersion within industries rather than between industries. Second, within-industry inequality is strongly tied to both the frequency of computer usage among workers and the fraction of total employment with a college degree. Both results lend support to the idea that skill-biased technological change has been an important element in the rise of U.S. wage inequality.

Suggested Citation

  • Christopher H. Wheeler, 2005. "Evidence on wage inequality, worker education, and technology," Review, Federal Reserve Bank of St. Louis, vol. 87(May), pages 375-393.
    • Handle: RePEc:fip:fedlrv:y:2005:i:may:p:375-393:n:v.87no.3
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    Cited by:

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    3. Schlicht, Ekkehart, 2008. "Wage Dispersion, Over-Qualification, and Reder Competition," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 1, pages 1-22.
    4. Zhang, Jingjing, 2015. "International factor mobility, elasticity of substitution in production and the skilled–unskilled wage gap," International Review of Economics & Finance, Elsevier, vol. 35(C), pages 122-129.
    5. Lustig, Hanno & Syverson, Chad & Van Nieuwerburgh, Stijn, 2011. "Technological change and the growing inequality in managerial compensation," Journal of Financial Economics, Elsevier, vol. 99(3), pages 601-627, March.
    6. Golub, Alla & Henderson, Ben & Hertel, Thomas & Rose, Steven & Avetisyan, Misak & Sohngen, Brent, 2010. "Effects of the GHG Mitigation Policies on Livestock Sectors," GTAP Working Papers 3427, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    7. van de Klundert, Theo, 2008. "Looking back, looking ahead: Biased technological change, substitution and the wage gap," Journal of Macroeconomics, Elsevier, vol. 30(2), pages 707-713, June.
    8. Sean E. Mulholland, 2019. "Stratification by regulation: Are bootleggers and Baptists biased?," Public Choice, Springer, vol. 180(1), pages 105-130, July.
    9. Zhang, Jingjing, 2013. "Factor mobility and skilled–unskilled wage inequality in the presence of internationally traded product varieties," Economic Modelling, Elsevier, vol. 30(C), pages 579-585.

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