Abstract:
This article analyzes the relationship between technology and wage
inequality by using systematic data on the U.S. labor market during the
1990s. We focus on the technical change allowing automated machines
to replace human labor in some occupational tasks previously performed
by workers. By using the results established in the literature, we classify
occupational tasks as technology-neutral, technology-substitute and
technology-complementary. By clustering workers according to the tasks
performed on duty, we show that variations in the prices of technologycomplementary
tasks explained the observed increase in residual
wage inequality in the upper echelon of the wage distribution, whereas
variations in the prices of technology-substitute tasks explained the
observed reduction of wage inequality in the bottom echelon of the wage
distribution. These results conform with the thesis that one of the effects of
routine-biased technical change is to hollowing-out the wage distribution.
