TY - JOUR AU - Dunne,Timothy AU - Haltiwanger,John AU - Foster,Lucia TI - Wage and Productivity Dispersion in U.S. Manufacturing: The Role of Computer Investment JF - National Bureau of Economic Research Working Paper Series VL - No. 7465 PY - 2000 Y2 - January 2000 UR - http://www.nber.org/papers/w7465 L1 - http://www.nber.org/papers/w7465.pdf N1 - Author contact info: Timothy Dunne Department of Economics Hester Hall University of Oklahoma Norman, OK 73019 Tel: 405 325 2863 E-Mail: tim.dunne@clev.frb.org John C. Haltiwanger Department of Economics University of Maryland College Park, MD 20742 Tel: 301/405-3504 Fax: 301/405-3542 E-Mail: haltiwan@econ.umd.edu Lucia Foster Center for Economic Studies Census Bureau Room 211/WP11 Washington, DC 20233-6300 Tel: 301-763-6444 Fax: Senior Economist E-Mail: lucia.s.foster@census.gov AB - By exploiting establishment-level data, this paper sheds new light on the source of the changes in the structure of production, wages, and employment that have occurred over the last several decades. Based on theoretical work by Caselli (1999) and Kremer and Maskin (1996), we focus on investigating the following two related hypotheses. The first hypothesis is that the channel through which skill biased technical change works through the economy is via changes in the dispersion in wages and productivity across establishments. The second is that the increased dispersion in wages and productivity across establishments is linked to differential rates of technological adoption across establishments. Our findings are supportive of these hypotheses. Specifically, we find that (1) the between plant component of wage dispersion is a growing part of total wage dispersion, (2) much of the between plant increase in dispersion is within industries, (3) the between plant measures of wage and productivity dispersion have increased substantially over the last few decades, and (4) a substantial fraction of the rising dispersion in wages and productivity is accounted for by increasing wage and productivity differentials across high and low computer investment per worker plants and high and low capital intensity plants. ER -