Skill Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles

66 Pages Posted: 7 Feb 2002 Last revised: 15 Feb 2002

See all articles by David Card

David Card

University of California, Berkeley - Department of Economics; Institute for the Study of Labor (IZA); National Bureau of Economic Research (NBER)

John E. DiNardo

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; National Bureau of Economic Research (NBER)

Date Written: February 2002

Abstract

The rise in wage inequality in the U.S. labor market during the 1980s is usually attributed to skill-biased technical change (SBTC), associated with the development of personal computers and related information technologies. We review the evidence in favor of this hypothesis, focusing on the implications of SBTC for economy-wide trends in wage inequality, and for the evolution of wage differentials between various groups. A fundamental problem for the SBTC hypothesis is that wage inequality stabilized in the 1990s, despite continuing advances in computer technology. SBTC also fails to explain the closing of the gender gap, the stability of the racial wage gap, and the dramatic rise in education-related wage gaps for younger versus older workers. We conclude that the SBTC hypothesis is not very helpful in understanding the myriad shifts in the structure of wages that have occurred over the past three decades.

Suggested Citation

Card, David E. and DiNardo, John, Skill Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles (February 2002). NBER Working Paper No. w8769. Available at SSRN: https://ssrn.com/abstract=299813

David E. Card (Contact Author)

University of California, Berkeley - Department of Economics ( email )

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Institute for the Study of Labor (IZA)

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John DiNardo

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )

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HOME PAGE: http://www-personal.umich.edu/~jdinardo/

National Bureau of Economic Research (NBER)

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