Technological Change, Computerization, and the Wage Structure

Abstract

comments. Overall wage inequality and educational wage differentials have expanded substantially in the United States over the past two decades. This widening of the wage structure has coincided with the rapid computerization of the work place. Thus, it is not surprising that many labor market analysts have tried to draw a causal connection between rising earnings inequality and increases in growth rate of the relative demand for more-skilled workers driven by technological and organizational changes associated with the computer revolution (e.g., Bound and Johnson 1992; Krueger 1993). Such inferences follow a venerable and fruitful tradition extending back to Paul Douglas (1926) and Jan Tinbergen (1975) of viewing the evolution of the wage structure (at least partially) as depending on a race between technological development and educational advance. This hypothesis implies that improvements in access to post-secondary schooling and appropriate skills training may be necessary to allow the productivity benefits of the new technologies associated with the digital economy to be more widely shared. Two key pieces of evidence are often cited as being strongly suggestive of an integral role for skill-biased technological change in the recent rise in U.S. wage inequality. 1 The first is that the

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