TY  - JOUR
AU  - Davis,Donald R.
TI  - Technology, Unemployment, and Relative Wages in a Global Economy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5636
PY  - 1996
Y2  - June 1996
UR  - http://www.nber.org/papers/w5636
L1  - http://www.nber.org/papers/w5636.pdf
N1  - Author contact info:
Donald R. Davis
Columbia University, Department of Economics
1038 Intl. Affairs Building
420 West 118th St.
New York, NY 10027
Tel: 212/854-4037
Fax: 212/854-8059
E-Mail: drd28@columbia.edu
AB  - Arguably the most important development in recent decades in US factor markets is the decline in the relative wage of the unskilled.  By contrast, in Europe it is undoubtedly the rise and persistence of unemployment.  Technology has been identified as a key reason for the rising US wage inequality, while labor market rigidities are often cited as a key reason for European unemployment. This paper seeks to provide a unified account of these major factor market developments.  It models the impact of technical change on relative wages and unemployment in a world in which one country has flexible and the other rigid labor market institutions.  The results depart significantly but sensibly from what one would expect in a fully flexible wage world.  A few stylized facts help to narrow the field to a few candidates to account for these factor market developments.
ER  -