List of References
Acemoglu, D., 1998, “Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality,” Quarterly Journal of Economics, Vol. 113 No. 4, November.
Autor, D., L. Katz, and A. Krueger, 1998, “Computing Inequality: Have Computers Changed the Labor Market?” Quarterly Journal of Economics, November.
Berman, E., J. Bound and S. Machin, 1998, “Implications of Skill-Biased Technological Change: International Evidence,” Quarterly Journal of Economics, Vol. 113 No. 4, November.
Blankenau, W., 1999, “A Welfare Analysis of Policy Responses to the Skilled Wage Premium,” Review of Economic Dynamics, Vol. 2, 209–849.
Bound, J. and G. Johnson, 1992, “Changes in the Structure of Wages in the 1980s: An Evaluation of Alternative Explanations,” American Economic Review, Vol. 83 No 3, June.
Devroye, D. and R. Freeman, 2001, “Does Inequality in Skills Explain Inequality of Earnings across Advanced Countries?,” NBER Working Paper 8140, February.
DiNardo, J., N. Fortin and T. Lemieux, 1996, “Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semi-parametric Approach,” Econometrica, Vol. 64, No. 5, 1001–1044.
Galor, O. and O. Moav, 2000, “Ability-Biased Technological Transition, Wage Inequality and Economic Growth,” Quarterly Journal of Economics, Vol. 115 No. 2, May.
Gottschalk, P. and T. Smeeding, 1997, “Cross-National Comparisons of Earnings and Income Inequality,” Journal of Economic Literature, Vol. XXXV, pp. 633–687.
Haskel, J. and M. Slaughter, 1998, “Does The Sector Bias of Skill-Biased Technical Change Explain Changing Wage Inequality?” NBER Working Paper 6565, May.
Katz, L. and K. M. Murphy, 1992, “Changes in Relative Wages, 1963-1987: Supply and Demand Factors,” Quarterly Journal of Economics, Vol. 107 No. 1, February.
Krusell, P., Ohanian, L., Rios-Rull, J. and G. Violante, 2000, “Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis,” Econometrica, Vol. 68, No.5, September.
Machin, S. and J. Van Reenen, 1998, “Technology and Changes in Skill Structure: Evidence from Seven OECD Countries,” Quarterly Journal of Economics, Vol. 113 No. 4, November.
Prasad, E. S., 2000, “The Unbearable Stability of the German Wage Structure: Evidence and Interpretation,” IMF Working Paper, WP/00/22, February.
Prasad, E. S., 2001, “What’s so Special About this Cyclical Expansion in the U.K.? A New Perspective from Labor Market Data,” IMF Working Paper, WP/01/XX, March.
Prepared by Martin Kaufman, Rodolfo Luzio, and Steven Dunaway
The model follows the basic framework of Blankenau (1999) and extends it using the approach developed by Galor and Moav (2000) to capture the positive link between investment in human capital and investment in new technologies. The model is described in a forthcoming IMF working paper by Kaufman, Luzio, and Dunaway.
Acemoglu (1998) characterizes this positive feedback loop as the result of a high proportion of skilled workers inducing a large demand for skill-biased technologies, which in turn encourages faster upgrading of the productivity of skilled workers.
See, for example, Autor, Katz, and Krueger (1998) and Katz (1999). These studies conclude that the prime cause of the rise in the skill premium was a shift in the skill structure of labor demand brought about by skill-biased technological changes.