General purpose technology and wage inequality

Philippe Aghion, Peter Howitt, Giovanni L. Violante

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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.

    Original languageEnglish (US)
    Pages (from-to)315-345
    Number of pages31
    JournalJournal of Economic Growth
    Volume7
    Issue number4
    DOIs
    StatePublished - Dec 2002

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    Keywords

    • Experience premium
    • General purpose technology
    • Skill transferability
    • Vintage compatibility
    • Wage inequality

    ASJC Scopus subject areas

    • Economics and Econometrics

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