NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Accounting for Changes in Between-Group Inequality

Ariel Burstein, Eduardo Morales, Jonathan Vogel

NBER Working Paper No. 20855
Issued in January 2015
NBER Program(s):   EFG   ITI   LS

We perform a quantitative analysis of observed changes in U.S. between-group inequality between 1984 and 2003. We use an assignment framework with many labor groups, equipment types, and occupations in which changes in inequality are caused by changes in workforce composition, occupation demand, computerization, and labor productivity. We parameterize our model using direct measures of computer usage within labor group-occupation pairs and quantify the impact of each shock for various measures of between-group inequality. We find, for instance, that the combination of computerization and shifts in occupation demand account for roughly 80% of the rise in the skill premium, with computerization alone accounting for roughly 60%. We show theoretically how computerization and changes in occupation demand may be caused by international trade and quantify the impact of trade in computers on U.S. inequality.

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This paper was revised on January 19, 2016

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20855

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