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Author: Le, Nhan
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1. Le, Nhan
Human Capital, Technological Change and Wage Inequality
Ph.D. Dissertation, Department of Economics, Indiana University, 2012
Cohort(s): NLSY79
Publisher: ProQuest Dissertations & Theses (PQDT)
Keyword(s): Armed Forces Qualifications Test (AFQT); Cognitive Ability; Human Capital; Mobility, Occupational; Technology/Technological Changes; Wage Gap

Permission to reprint the abstract has not been received from the publisher.

This dissertation studies how the interaction between human capital and technological change determines the trends in wage inequality in the United States. Since the late 1980s, the US labor market has been characterized by rising "wage polarization," a phenomenon involving the rise in employment shares of the low and high earners in the labor market. Recently, leading economists hypothesized that the information computer technology (ICT) revolution which raised demand for high pay cognitive occupations, is responsible for wage polarization. Their theory is commonly known as the "routinization hypothesis." The first chapter of my thesis questions whether the ICT revolution actually raises the demand for high pay cognitive jobs in place of middle pays non-cognitive jobs. Replicating regression analyses in the literature, I find that exposure to ICT is indeed associated with higher individual wage growth for cognitive workers. When individual cognitive ability is factored in, however, cognitive occupation per se no longer gives an edge over others in gaining from ICT. This result suggests that underlying the observed rise in demand for cognitive occupations is a complementary relationship between ICT and cognitive ability. In the second chapter, I observe that occupational mobility has a crucial role in workers' attainment of cognitive occupations, which is generally abstracted away by the routinization hypothesis. Using an economic model widely used in the literature on post-schooling earnings, I demonstrate that in order to provide a better understanding of the changes in occupational structure of the labor force, the routinization hypothesis must be supported by a theory based on occupational mobility. The last chapter studies the interaction between technological change and the supply of educated workers. It is applied in the context of international trade to show that exposure to trade does not necessarily lead to rising wage inequality if the education system can sufficiently support rising demand for education.
Bibliography Citation
Le, Nhan. Human Capital, Technological Change and Wage Inequality. Ph.D. Dissertation, Department of Economics, Indiana University, 2012.