Technology-driven explanations cannot explain cross-national inequality patterns.

Evidence

Several hypotheses have been proposed to explain the rise in income inequalities. The dominant explanation in labor economics is capitaland skill-biased technological change. Researchers argue that the spread of information technology since the 1980s disproportionately increased the output of physical capital ðBlanchard 1997; Acemoglu 2003; Kristal 2011Þ and the demand for skilled workers ðAcemoglu 2002; Kaplan and Rauh 2010Þ. The decline of labor’s share, increased earnings inequalities, and the college premium in this account mostly reflect technology-driven changes in marginal productivity. Although intuitive, this theory fails to explain several empirical patterns. First, it does not provide a satisfying answer as to why a comparable concentration of income is not observed in continental Europe or Japan ðPiketty and Saez 2006Þ, where similar technological changes also took place. Second, neither does it explain why there is a larger decline of labor’s share in Europe than in the United States. Third, the skill-biased hypothesis is inconsistent with the growth in demand of labor at the bottom of the skill distribution. Most important, this family of theory does not explain why the growth of wage dispersion slowed down while the development of information technology took off in the late 1990s ðCard and DiNardo 2002Þ. — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 33

Categorization

• QUESTION: The timing objection (wage dispersion slowed as IT took off in the late 1990s) is a decisive empirical knockout worth citing in any critique of skill-biased technological change.
• XREF: connects to: Skill-biased technological change cannot explain cross-national variation in income inequality — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 33; Deunionization and import competition drive inequality, but computer investment’s inequality effects are uneven. — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 170

Related

• Skill-biased technological change cannot explain cross-national variation in income inequality (similarity 0.96)
• Deunionization and import competition drive inequality, but computer investment’s inequality effects are uneven. (similarity 0.88)
• Job polarization trends stem from political and institutional choices, not technological inevitability (similarity 0.79)

Broader Connections

• Skill-biased technological change cannot explain cross-national variation in income inequality #corroborates (0.95) — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 33
• Deunionization and import competition drive inequality, but computer investment’s inequality effects are uneven. #corroborates (0.85) — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 170