Technical Change, Task Allocation, and Labor Unions

51 Pages Posted: 18 Oct 2022

See all articles by Martyna Marczak

Martyna Marczak

University of Hohenheim

Thomas Beissinger

University of Hohenheim; IZA Institute of Labor Economics

Franziska Brall

University of Hohenheim

Abstract

We propose a novel framework that integrates the "task approach" for a more precise production modeling into the search-and-matching model with low- and high-skilled workers, and wage setting by labor unions. We establish the relationship between task reallocation and changes in wage pressure, and examine how skill- biased technical change (SBTC) affects the task composition, wages of both skill groups, and unemployment. In contrast to the canonical model with a fixed task allocation, low-skilled workers may be harmed in terms of either lower wages or higher unemployment depending on the relative task-related productivity profile of both worker types. We calibrate the model to the US and German data for the periods 1995-2005 and 2010-2017. The simulated effects of SBTC on low-skilled unemployment are largely consistent with observed developments. For example, US low-skilled unemployment increases due to SBTC in the earlier period and decreases after 2010.

Keywords: task approach, search and matching, labor unions, skill-biased technical change, labor demand, wage setting

JEL Classification: J64, J51, E23, E24, O33

Suggested Citation

Marczak, Martyna and Beissinger, Thomas and Brall, Franziska, Technical Change, Task Allocation, and Labor Unions. IZA Discussion Paper No. 15632, Available at SSRN: https://ssrn.com/abstract=4247486 or http://dx.doi.org/10.2139/ssrn.4247486

Martyna Marczak (Contact Author)

University of Hohenheim ( email )

Schloss, Museumsfluegel
Stuttgart, 70593
Germany

HOME PAGE: http://labour.uni-hohenheim.de/

Thomas Beissinger

University of Hohenheim ( email )

Schloss Museumsflügel
Stuttgart, 70593
Germany

HOME PAGE: http://labour.uni-hohenheim.de/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Franziska Brall

University of Hohenheim ( email )

Fruwirthstr. 48
Stuttgart, 70599
Germany

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