Accounting for Changes in Between-Group Inequality

88 Pages Posted: 20 Jan 2015 Last revised: 27 Jun 2021

See all articles by Ariel T. Burstein

Ariel T. Burstein

University of California, Los Angeles (UCLA) - Department of Economics

Eduardo Morales

Princeton University - Department of Economics

Jonathan Vogel

UCLA; NBER

Date Written: January 2015

Abstract

We perform a quantitative analysis of observed changes in U.S. between-group inequality between 1984 and 2003. We use an assignment framework with many labor groups, equipment types, and occupations in which changes in inequality are caused by changes in workforce composition, occupation demand, computerization, and labor productivity. We parameterize our model using direct measures of computer usage within labor group-occupation pairs and quantify the impact of each shock for various measures of between-group inequality. We find, for instance, that the combination of computerization and shifts in occupation demand account for roughly 80% of the rise in the skill premium, with computerization alone accounting for roughly 60%. We show theoretically how computerization and changes in occupation demand may be caused by international trade and quantify the impact of trade in computers on U.S. inequality.

Suggested Citation

Burstein, Ariel T. and Morales, Eduardo and Vogel, Jonathan, Accounting for Changes in Between-Group Inequality (January 2015). NBER Working Paper No. w20855, Available at SSRN: https://ssrn.com/abstract=2551663

Ariel T. Burstein (Contact Author)

University of California, Los Angeles (UCLA) - Department of Economics ( email )

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Eduardo Morales

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

Jonathan Vogel

UCLA ( email )

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Los Angeles, CA 90095-1477
United States

NBER ( email )

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