Embedding skill bias: Technology, institutions, and inequality in wages and benefits

TY - JOUR

T1 - Embedding skill bias: Technology, institutions, and inequality in wages and benefits

AU - Diessner, Sebastian

AU - Durazzi, Niccolo

AU - Hope, David

PY - 2025/1/21

Y1 - 2025/1/21

N2 - Is rising inequality an inevitable consequence of the transition to a knowledge-based economy? Departing from existing approaches in labour economics and comparative political economy, we develop an account of inequality in the knowledge economy that foregrounds the role of labour market institutions. We argue that collective bargaining institutions play a critical role in mediating the skill bias commonly associated with the diffusion of information and communications technologies (ICT), because they determine whether employers have the discretion to selectively reward strategically important high-skilled workers with greater wages and benefits. We then test our argument by carrying out cross-country analyses of both wage premia and non-wage benefits in the OECD countries. We find robust evidence in support of our theoretical propositions across a range of model specifications.

AB - Is rising inequality an inevitable consequence of the transition to a knowledge-based economy? Departing from existing approaches in labour economics and comparative political economy, we develop an account of inequality in the knowledge economy that foregrounds the role of labour market institutions. We argue that collective bargaining institutions play a critical role in mediating the skill bias commonly associated with the diffusion of information and communications technologies (ICT), because they determine whether employers have the discretion to selectively reward strategically important high-skilled workers with greater wages and benefits. We then test our argument by carrying out cross-country analyses of both wage premia and non-wage benefits in the OECD countries. We find robust evidence in support of our theoretical propositions across a range of model specifications.

U2 - 10.5129/001041525X17367727003388

DO - 10.5129/001041525X17367727003388

M3 - Article

SN - 0010-4159

JO - COMPARATIVE POLITICS

JF - COMPARATIVE POLITICS

ER -