Precautionary Demand for Education, Inequality, and Technological Progress

Technical Change, Inequality, and the Labor Market

“…This has been argued by Aghion, Howitt and Violante (1999) and Gould, Moav and Weinberg (2000). According to this approach, an increase in inequality also results from more rapid technical change, not because of skill bias but because of increased "churning" in the labor market.…”

Non-Routine Tasks, Restructuring of Firms, and Wage Inequality Within and Between Skill-Groups

“…First, workers assigned to non-routine tasks are more productive than those 6 For instance, note that formal education levels are highly related to public education policy (either by public scholling provision or by Þnancial aid for university attendants), which, for simplicity, is treated as exogenous in our model. The human capital literature has identiÞed various factors which are relevant for education decisions of individuals, e.g., credit constraints (Galor and Zeira, 1993), uncertainty (Levhari and Weiss, 1974;Gould et al, 2001) and social networks (Bénabou, 1996). Treating such factors as exogenous in an analysis of wage inequality, i.e., abstracting from the educational attainment decision, follows e.g.…”

“…As a result, wage inequality within skilled and unskilled labor increases, in addition to rising between-group inequality. Gould et al (2001) offer an alternative explanation for rising residual wage inequality by arguing that increasing uncertainty in the rate of technological change across sectors disproportionately affects the learning requirements of unskilled labor, thereby raising demand for education as insurance. In a similar vein, Aghion (2002) and Aghion et al (2002) argue that within-group wage inequality rises with the speed of diffusion of new general purpose technologies, by showing that inequality may arise even among (with respect to their abilities) identical workers with different opportunities to adapt to the most recent vintages of machines.…”

On the Industry Specificity of Human Capital and Business Cycles

“…It broadly relates to studies that examine the intra-and inter-temporal trade-offs between different types of human capital in environments with uncertainty, introduction of new technologies, or trade. Such mechanisms are analyzed in Goos et al (2014), Hummels et al (2014), Autor and Dorn (2013), Krueger and Kumar (2004a,b), and Gould et al (2001), among others. We contribute to all these groups of studies by introducing a novel way for horizontally differentiating among types of skills and analyzing the effect of human capital portfolio composition in terms of these skills on propagation of sectoral shocks.…”