Technology and Changes in Skill Structure: Evidence from an International Panel of Industries
Author(s)
Machin, Stephen; Ryan, Annette; Van Reenan, John
Abstract
The growth of inequality in wages in recent years is to some extent associated with changes in the structure of skills. Whether defined by occupation or education, or measured by their share of employment or their share of the total wage, workers with higher skills have become a larger proportion of the economies of industrialized countries. The difference in wages between higher-skilled and lower-skilled workers increased in the United States and even more so in the United Kingdom. In several European countries, unemployment rose, accompanied by employment shifts that adversely affected less-skilled workers. There is a great deal of debate about whether these changes result from the spread of new computer technologies, global trade patterns, or changes in labor market institutions. This article examines four countries where comparable data are available over a number of years from the 1970s and 1980s: the United States, the United Kingdom, Denmark and Sweden. The authors find evidence that technological change shifted demand toward higher-skilled workers in each of these countries. However, labor market institutions had an important influence on the extent to which less-skilled workers suffered wage declines or increasing unemployment.
