We investigate the hypothesis that the combination of three related innovations—1) information technology (IT), 2) complementary workplace reorganization, and 3) new products and services — constitute a signi�cant skill-biased technical change affecting labor demand in the United States. Using detailed �rm-level data, we �nd evidence of complementarities among all three of these innovations in factor demand and productivity regressions. In addition, �rms that adopt these innovations tend to use more skilled labor. The effects of IT on labor demand are greater when IT is combined with the particular organizational investments we identify, highlighting the importance of IT-enabled organizational change. I.

This paper investigates the determination and consequences of organizational changes (OC) in a panel of British and French establishments. Organizational changes include the decentralization of authority, delayering of managerial functions and increased multi-tasking. We argue that OC and skills are complements. We offer support for the hypothesis of “skill biased ” organizational change with three empirical findings. First, organizational changes reduce the demand for unskilled workers in both countries. Second, OC is negatively associated with increases in regional skill price differentials (a measure of the relative supply of skill). Third, OC leads to greater productivity increases in establishments with larger initial skill endowments. Technical change is also complementary with human capital, but the effects of OC are not simply due to technological change but have an independent role. Key words, organizational change, skills, technology, panel data. JEL classification: L2, J3, O32

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How does information technology affect wages and organization? To answer this question, we model an economy formed by a continuum of agents with heterogeneous cognitive skill, who use a production technology that requires physical inputs and knowledge. Our model generates an assignment of workers to positions, a wage structure, and a universe of knowledge-based hierarchies with different allocations of tasks, spans of control, and number of layers. It displays positive sorting between production workers and problem solvers, an increasing relationship between rank and cognitive ability, an increasing and convex wage schedule and a positive relation between wages and firm size. We use our model to study the impact of information technology on the labor market andonthestructureoffirms. We show that the evolution of wage inequality and firm size is consistent with decreases in the cost of accessing information in the 80’s and early 90’s and decrease in the cost of communicating information in the late 90’s. Our theory is also consistent with the evidence on decentralization, flatter hierarchies and larger spans of control. 1

After decades of autarky, China opened its economy to foreign investors in the late 1970s and early 1980s. This paper examines the impact of the resulting outsourcing of production from Hong Kong to China on Hong Kong’s labor market as a quasi-natural experiment to study the impact of globalization and outsourcing on relative wages of less-skilled workers. We document that the relative demand for skilled workers in Hong Kong increased sharply at exactly the same time outsourcing to China began to increase in the early 1980s. We show that rapid skill upgrading within detailed industries in the manufacturing sector accounts for most of the growth in the relative demand for skilled workers, but played a much less important role in the non-manufacturing sector. Using several measures of outsourcing to China, we show that the rate of skill upgrading has been greater in industries that have seen a greater degree of outsourcing to China. These measures of outsourcing account for 45 to 60 percent of the shift in the relative demand for skilled workers.

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ABSTRACT __________________________________________________________________________ In this paper we present an analytically tractable general equilibrium overlapping-generations model of human capital accumulation, and study its implications for the evolution of the U.S. wage distribution from 1970 to 2000. The key feature of the model, and the only source of heterogeneity, is that individuals differ in their ability to accumulate human capital. Therefore, wage inequality results only from differences in human capital accumulation. We examine the response of this model to skill-biased technical change (SBTC) theoretically. We show that in response to SBTC, the model generates behavior consistent with the U.S. data including (i) a rise in overall wage inequality in both the short run and long run, (ii) an initial fall in the education premium followed by a strong recovery, leading to a higher premium in the long run, (iii) the fact that most of this fall and rise takes place among younger workers, (iv) stagnation in median wage growth (and a slowdown in aggregate labor productivity), and (v) a rise in consumption inequality that is much smaller than the rise in wage inequality. These results suggest that the heterogeneity in the ability to accumulate human capital is an important feature for understanding the effects of

A large and growing literature surveys and attempts to explain changes in wage dispersion in many developed countries over the past decades. Many researchers, like Ruiz Arranz (2001) or Acemoglu (2002), have studied the US case and have found that returns to education fell during the 1970s, when there was a very sharp increase in the supply of skilled workers, and then began a steep rise during the 1980s. Furthermore, the skill premium (the ratio between wages of skilled workers and wages of unskilled ones) in the US has increased after 1979. For the Spanish case, Torres (2000) has studied skill premium to find out an increasing trend in the eighties where as Nuñez and Alfaro (2009) show evidences of a decline during the nineties. The recent consensus is that technical change favours skilled workers, replaces tasks previously performed by the unskilled, and exacerbates inequality. So, in this paper, we analyze the evolution of the production function in Spain over the period 1994-2007, testing the type of technical change in the Spanish labour market. Moreover, Spanish Regions production functions are analyzed in 2006. Our objective relies both on the differentiation of efficiency units in skilled and unskilled work and on the study of the interaction between technical change and skill premium. On the other hand, a coherent Spanish wage micro-data base is achieved, using several data sources. So, labour force proportions of skilled and unskilled workers and skill premium are obtained, using 1994-2001 data from Eurostat´s ECHP, and 2004-2007 data come from Eurostat´s EU-SILC. Capital stock is obtained through the estimations provided by BBVA Foundation and IVIE Institute, whereas PIB data come from the

The NZ economy has performed poorly over the past 50 years. I have previously argued that an important source of this poor relative economic performance was the size and location of the NZ economy. One objection to this argument is that whereas there has been substantial decline in NZ’s relative economic position, there has been considerably less change in the size and location of the NZ economy. This paper examines this argument and concludes that the size and location of the NZ economy can explain the relative decline of the NZ economy through time. The argument is that the skill and sectoral bias of technical change over much of the 20 th century, and particularly over the past 30 years, has systematically disadvantaged NZ. Although NZ has a very strong comparative advantage in primary products, the effects of the size and location of the economy have made it very difficult for NZ firms to establish sustainable competitive advantage in the manufacturing and services sectors in which most of the technological progress has occurred. I argue that this, rather than the existence of policy distortions, is a likely explanation for NZ’s sustained relative income decline. Accordingly, the policy reforms only partly addressed NZ’s problems, and an additional set of policies may be required to reverse NZ’s relative income decline. † Economic Transformation Project, New Zealand Treasury. This paper is a preliminary draft. The views expressed

Firms ’ organizational choices are in�uenced by external conditions such as the instabilityof the product market. In order to address this issue in a macroeconomic perspective, we embed the �rm’s choice of organizational structure in a model of growth through creative destruction, which induces endogenous market volatility. We �nd that an increasing supply of skill or globalization may increase the rate of creative destruction, the skill premium, and the skilled wages, and it may depress the unskilled wages. We use an original data set to test the empirical relevance of our theory. I.