Macro Seminar

Benedetto Molinari

Pablo de Olavide


Seminar 3 – 14:30


This paper presents novel evidence on the relationship between occupational tasks, technology and wage inequality in the U.S. during the 1990s. By clustering workers according to their education, experience and the type of tasks performed on duty, we show that the evolution of overall wage inequality (i) at the bottom echelons of the wage distribution is driven by the reduction of within-group wage inequality, which is crucially determined by the (negative) effect of routine tasks; (ii) at the top echelons is driven to the same extent by the increase in within and between-group wage inequality, which are both determined by the (positive) effect of “cognitive” tasks. By developing a simple model of skill-heterogeneous workers who face endogenous occupational choices, we show that skill bias technology can rationalize the relationship between tasks and within-group wage inequality through an effect on the composition of the labor force that changes the average level of skills within each group of workers. The model argues that even in presence of a monotone skill premia, technology generates an empirically-consistent non-monotone effect on wage inequality, which expands at the top and bottom echelons of the wage distribution and decreases in the middle echelons.

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