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The price of polarization: estimating task prices under routine-biased technical change. (English) Zbl 1466.91149

Summary: This paper proposes a new approach to estimate task prices per efficiency unit of skill in the Roy model. I show how the sorting of workers into tasks and their associated wage growth can be used to identify changes in task prices under relatively weak assumptions. The estimation exploits the fact that the returns to observable talents will change differentially over time depending on the changes in prices of those tasks that they predict workers to sort into. In the generalized Roy model, also the average non-pecuniary amenities in each task are identified. I apply this approach to the literature on routine-biased technical change, a key prediction of which is that task prices should polarize. Empirical results for male workers in U.S. data indicate that abstract and manual tasks’ relative prices indeed increased during the 1990s and 2000s.

MSC:

91B39 Labor markets
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[1] Economic predictions and data
[2] The distributions of employment and wages for males age27in the NLSY and the CPS
[3] Pairwise correlations between talents, NLSY 1979 and 1997. NLSY79NLSY97
[4] Average talents in tasks, NLSY 1979 and 1997.
[5] Empirical results
[6] Estimated task price changes in the NLSY (1984/92 to 2007/09). (πA−πR)(πM−πR)πRModel Test
[7] Task price changes and average amenities in the NLSY (1984/92 to 2007/09). (πA−πR)(πM−πR)πRa¯A− ¯aRa¯M− ¯aR
[8] Change in log real wages by quantile of the wage distribution, actual and predicted
[9] Conclusion · Zbl 1131.83021
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