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Cited by 1,767Labor market dynamics and wage inequalityHistorical Economic and Social StudiesEconomic Theory and Policy

Technical change, inequality, and the labor market

Acemoglu, Daron·2002·Journal of Economic Literature
DOI 10.1257/jel.40.1.7
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Abstract

This essay discusses the effect of technical change on wage inequality. I argue that the behavior of wages and returns to schooling indicates that technical change has been skill-biased during the past sixty years. Furthermore, the recent increase in inequality is most likely due to an acceleration in skill bias. In contrast to twentieth century developments, most technical change during the nineteenth century appears to be skill-replacing. I suggest that this is because the increased supply of unskilled workers in the English cities made the introduction of these technologies profitable. On the other hand, the twentieth-century has been characterized by skill-biased technical change because the rapid increase in the supply of skilled workers has induced the development of skill-complementary technologies. The recent acceleration in skill bias is in turn likely to have been a response to the acceleration in the supply of skills during the past several decades.

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  • The widespread availability and affordability of computers has increased demand for high-skilled workers who can use these tools, a pattern known as capital-skill complementarity.

    “The ubiquity and affordability of computers have also spurred the demand for high-skilled workers capable of effectively leveraging these tools, a phenomenon known as capital-skill complementarity (e.g., Krusell et al. 2000, Acemoglu 2002).”

    From Skill-Biased Technical Change, Again? Online Gig Platforms and Local Employment (2025) · cites this paper as Acemoglu 2002

    Section 1.2 cites evidence that the rapid spread of computers increased demand for skills, and Section 5.1 discusses computers as high-tech capital associated with demand for educated workers. But the copy does not establish affordability as a driver; Section 4.2 also cautions that some skill upgrading in computerized industries may reflect an existing trend rather than a direct effect of computers. No page numbers are available in the supplied passages. (LLM, conf=0.85)

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  • SBTC theory holds that technological progress complements skilled workers by raising their relative productivity and replaces unskilled workers by automating their tasks.

    “The A canonical theory in this discourse is SBTC (Acemoglu 2002, Autor et al. 2003), which posits that technological progress complements skilled workers by boosting their relative productivity and substitutes unskilled workers by automating their tasks.”

    From Skill-Biased Technical Change, Again? Online Gig Platforms and Local Employment (2025) · cites this paper as Acemoglu 2002

  • Together, the upside for more-educated workers and downside for less-educated workers have magnified the distributional consequences of technological innovation, highlighting what is sometimes called "Skill-Biased Technological Change".

    “Together, the upside for more-educated workers and downside for less-educated workers have magnified the distributional consequences of technological innovation, highlighting what is sometimes called “Skill-Biased Technological Change” (67).”

    From The impact of generative artificial intelligence on socioeconomic inequalities and policy making (2024) · cites this paper as [67]

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3 of the 132 references couldn’t be matched to a known paper.

Research works printed but not linked: 17

  1. Change and Wage Inequality' Quarterly Journal of Economics , 113 (1998), 1055-1090.
  2. Technical Change or Endogenous Choice of Technique?' NBER Working Paper, (1999). Becker, Gary Human capital. Chicago: The University of Chicago Press, (1964).
  3. Caselli, Francesco 'Technological Revolutions' American Economic Review (1999).
  4. Davis, Steven J.; 'Cross-Country Patterns of Changes in Relative Wages' NBER Macroeconomic Annua l, 1992 MIT Press, Cambridge, 239-292.
  5. Foster, Andrew and Mark Rosenzweig 'Technical Change in Human Capital Return and Investments:Evidence from the Green Revolution' American Economic Review , 86, (1996), 931-953.
  6. Freeman, Richard and Karen Needles, 'Skill Di¤erences in Canada in an Era of Rising Labor Market Inequality,' in D. Card and R. Freeman, eds., Small Di¤erences That Matter , University of Chicago Press and NBER, Chicago, IL (1993).
  7. Gottschalk, Peter, 'Inequality in Income, Growth and Mobility: The Basic Facts,' Journal of Economic Perspectives 11 (1997), 21-40.
  8. Gordon, Robert Measurement of Durable Goods Prices, University of Chicago Press, 1990.
  9. Greenwood, Jeremy , Zvi Hecowtiz and Per Krusell, 'Long-Run Implications of InvestmentSpeci…c Techological Change,' American Economic Review, vol. 87 [3], (1997) 342-362.
  10. Greenwood, Jeremy and Mehmet Yorukoglu, '1974' Carnegie-Rochester Conference Series on Public Policy , XLVI (1997), 49-95.
  11. Habakkuk, H.J., American and British Technology in the Nineteenth Century , London: Cambridge University Press, 1962.
  12. Lawrence, Robert and Matthew Slaughter 'Trade and U.S. Wages: Giant Sucking Sound or Small Hiccup?' Brookings Papers on Economic Activity , (1993) pp. 161-226.
  13. Mokyr, Joel, The Levers of Riches: Technological Creativity and Economic Progress Oxford University Press, New York, 1990.
  14. Murnane, Richard J. and Frank Levy, Teaching the Basic New Skills , New York, The Free Press, 1996.
  15. Murphy, Kevin M. and W. Graig Riddell and Paul M. Romer, 'Wages, Skills and Technology in the United States and Canada,' in E. Helpman, ed., General Purpose Technologies Cambridge, MA, MIT Press, (1998).
  16. Schultz, Theodore, The Economic Value Education , Columbia University Press, New York (1967).
  17. Williamson, Je¤rey G. and Peter H. Lindert, American Inequality: A macroeconomic History , New York: Academic Press, 1980.

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Authors
Acemoglu, D.
Venue
Journal of Economic Literature
Publisher
American Economic Association
Published
2002-03
Volume
40
Issue
1
Pages
7-72
ISSN
0022-0515 (ISSN-L)
DOI
10.1257/jel.40.1.7
OpenAlex
W2106759695
Cited by
1,767
References
132
Citations by year
2026: 124 · 2025: 181 · 2024: 131 · 2023: 123 · 2022: 131 · 2021: 120 · 2020: 86 · 2019: 69 · 2018: 82 · 2017: 77 · 2016: 73 · 2015: 59 · 2014: 57 · 2013: 66 · 2012: 46
FWCI
65.44
Type
journal article
Language
en
Open access
closed
Locations
  • Journal of Economic Literature (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Labor market dynamics and wage inequality
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Historical Economic and Social Studies
  • Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Economic Theory and Policy
Keywords
skill-biased technological change, wage inequality, returns to education, labor supply, 19th-century industrialization, English cities, technological change

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