On the Evolution of Wage Inequality in Acemoglu's Model of Directed Technical Change

Weiss, Matthias

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URL: http://ub-madoc.bib.uni-mannheim.de/1292
URN: urn:nbn:de:bsz:180-madoc-12921
Document Type: Working paper
Year of publication: 2005
The title of a journal, publication series: None
Publication language: English
Institution: School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series: Veröffentlichungen des MEA (Mannheim Research Institute For the Economics of Aging) > MEA Discussion Papers
Subject: 330 Economics
Classification: JEL: J 31 O 33 ,
Subject headings (SWD): Technischer Fortschritt , Lohnstruktur , Gini-Koeffizient
Abstract: In Acemoglu's model of directed technical change, the skill-premium increases in consequence of an increase in the relative supply of skilled labor. In this paper, I argue that other measures of wage inequality such as the Gini-coefficient do not necessarily rise as well. The Gini-coefficient depends positively on the skill-premium but the effect of an increase in the relative supply of skilled labor is ambiguous. A simulation of Acemoglu's model shows that the growth in the relative supply of skilled labor has led to increased wage inequality in the past but will lead to decreasing wage inequality in the future.
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