Changes in between-group inequality: Computers, occupations, and international trade

Ariel Burstein, Eduardo Morales, Jonathan Vogel

Research output: Contribution to journalArticlepeer-review

23 Scopus citations

Abstract

We provide a unifying framework to quantify the impact of several determinants of changes in US between-group inequality. We use an assignment framework with many labor groups, equipment types, and occupations in which changes in inequality are driven by changes in workforce composition, occupation demand, computerization, and labor productivity. We parameterize the model using direct measures of computer usage within labor group-occupation pairs and quantify the impact of each shock for various dimensions of between-group inequality between 1984 and 2003. We find, for example, that computerization and shifts in occupation demand jointly account for roughly 80 percent of the rise in the skill premium, with computerization alone accounting for roughly 60 percent. In an open-economy extension of the model, we show how computerization and changes in occupation demand can be caused by changes in the extent of international trade and perform counterfactual exercises to quantify these effects.

Original languageEnglish (US)
Pages (from-to)348-400
Number of pages53
JournalAmerican Economic Journal: Macroeconomics
Volume11
Issue number2
DOIs
StatePublished - 2019

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

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