Wage inequality, technology and trade: 21st century evidence

Van Reenen, John ORCID: 0000-0001-9153-2907 (2011) Wage inequality, technology and trade: 21st century evidence. CEP occasional papers (28). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

This paper describes and explains some of the principal trends in the wage and skilldistribution in recent decades. There have been sharp increases in wage inequality across theOECD, beginning with the US and UK at the end of the 1970s. A good fraction of thisinequality growth is due to technology-related increases in the demand for skilled workersoutstripping the growth of their supply. Since the early 1990s, labour markets have becomemore polarized with jobs in the middle third of the wage distribution shrinking and those inthe bottom and top third rising. I argue that this is because computerization complements themost skilled tasks, but substitutes for routine tasks performed by middle wage occupationssuch as clerks, leaving the demand for the lowest skilled service tasks largely unaffected.Finally, I argue that technology is partly endogenous, for example it has been spurred bytrade with China. Thus, trade does matter for changes in the labour market through inducingfaster technical change rather than just through the conventional Heckscher-Ohlinmechanism.

Item Type:	Monograph (Working Paper)
Official URL:	http://cep.lse.ac.uk/
Additional Information:	© 2011 The Author
Divisions:	Economics Centre for Economic Performance
Subjects:	H Social Sciences > HD Industries. Land use. Labor
JEL classification:	J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J23 - Employment Determination; Job Creation; Demand for Labor; Self-Employment J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J24 - Human Capital; Skills; Occupational Choice; Labor Productivity O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O33 - Technological Change: Choices and Consequences; Diffusion Processes
Date Deposited:	23 Nov 2012 10:06
Last Modified:	11 Dec 2024 19:44
URI:	http://eprints.lse.ac.uk/id/eprint/47494

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