Are the unskilled hurt by biased technological change?

Abstract

"Our two-sector model with wage setting on imperfect labor markets reveals that the conventional wisdom with regard to the effects of biased technological change needs some qualifications. Based on a general equilibrium framework we show that the unskilled can indirectly profit from biased technological change via two channels: the increase in aggregate demand and the reduction in wage pressure due to a decline in the aggregate price level. Harmful employment consequences for the unskilled are only obtained under a solidaristic wage policy designed to let the unskilled participate in the productivity gains of the skilled. Furthermore, our results suggest that a decline in real wages for low-skilled workers cannot be explained by the hypothesis of skill-biased technological change alone." (Author's abstract, IAB-Doku) ((en))

Cite article

Beissinger, T. & Möller, J. (2001): Are the unskilled hurt by biased technological change? Some qualifications from a general equilibrium perspective. (Regensburger Diskussionsbeiträge zur Wirtschaftswissenschaft 353), Regensburg, 12 p.