Ability-Biased Technological Transition, Wage Inequality, and Economic Growth

This paper develops a growth model characterized by ability-biased technological transition in which the evolution of technology, education attainment, and wage inequality is consistent with the observed pattern in the United States and other advanced countries over the past several decades. It argu...

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Bibliographic Details
Published in:The Quarterly journal of economics 2000-05, Vol.115 (2), p.469-497
Main Authors: Galor, Oded, Moav, Omer
Format: Article
Language:English
Subjects:
Economic growth
Economic growth rate
Economic theory
Economic transitions
Economics
Employee efficiency
Growth models
Human capital
Impact analysis
Income distribution
Income inequality
Inequality
Skilled labor
Steady state economies
Technological change
Unskilled labor
Wage differential
Wages
Wages & salaries
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Summary:This paper develops a growth model characterized by ability-biased technological transition in which the evolution of technology, education attainment, and wage inequality is consistent with the observed pattern in the United States and other advanced countries over the past several decades. It argues that an increase in the rate of technological progress raises the return to ability and simultaneously generates an increase in wage inequality between and within groups of skilled and unskilled workers, an increase in average wages of skilled workers, a temporary decline in average wages of unskilled workers, an increase in education, and a productivity transitory slowdown.
ISSN:0033-5533
1531-4650
DOI:10.1162/003355300554827