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General Purpose Technology and Wage Inequality

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Abstract

The recent changes in the US wage structure are often linked to the new wave of capital-embodied information technologies. The existing literature has emphasized either the accelerated pace or the skill-bias of embodied technical progress as the driving force behind the rise in wage inequality. A key, neglected, aspect is the “general purpose” nature of the new information technologies. This paper formalizes the idea of generality of technology in two ways, one related to human capital (skill transferability) and one to physical capital (vintage compatibility) and studies the impact of an increase in these two dimensions of technological generality on equilibrium wage inequality.

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Authors and Affiliations

  1. University College London, Harvard University, and CEPR, USA

    Philippe Aghion

  2. USA

    Peter Howitt

  3. Institute of Fiscal Studies, and CEPR, University College London, UK

    Giovanni L. Violante†

Authors
  1. Philippe Aghion
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  2. Peter Howitt
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  3. Giovanni L. Violante†
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Aghion, P., Howitt, P. & Violante†, G.L. General Purpose Technology and Wage Inequality. Journal of Economic Growth 7, 315–345 (2002). https://doi.org/10.1023/A:1020875717066

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  • DOI: https://doi.org/10.1023/A:1020875717066

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