Section 2: Costas Flashcards
(55 cards)
Title: Katz & Murphy (1992)
Changes in Relative Wages, 1963-1987: Supply and Demand Factors
Motivation: Katz & Murphy (1992) - Changes in Relative Wages, 1963-1987: Supply and Demand Factors
US wage gaps between high and low skill workers exploded after the late-1970s. Are those gaps mainly due to a flood of college grads (supply) or to rising employer demand for skill (skill-biased technological change)?
Setting: Katz & Murphy (1992) - Changes in Relative Wages, 1963-1987: Supply and Demand Factors
United States, 1963-87. Annual March Current Population Survey files track wages and hours for the whole workforce
Supply-Only Test: Katz & Murphy (1992) - Changes in Relative Wages, 1963-1987: Supply and Demand Factors
Compute the dot-product of wage changes and quantity changes for every five-year window. If only supply moved, the product should be negative; a positive sign means demand must have shifted.
2-Part CES: Katz & Murphy (1992) - Changes in Relative Wages, 1963-1987: Supply and Demand Factors
Collapse labour into “college-equivalent” and “high-school-equivalent” units. Estimate the substitution elasticity (how fast or how slow do college equivalent workers substitute high-school workers), then back out the trend in the relative demand shifter (interpreted as skill-biased tech change.
Decomposing Demand Shift: Katz & Murphy (1992) - Changes in Relative Wages, 1963-1987: Supply and Demand Factors
Build counterfactual indices to ask how much of the demand shift comes from inter- or intra industry reallocation, labour up-skilling or trade.
Robustness: Katz & Murphy (1992) - Changes in Relative Wages, 1963-1987: Supply and Demand Factors
CES results unchanged when adding union density, import penetration, or alternative industry splits; trade-only and sectoral reallocation stories explain at most a minor share of the overall demand shift.
Results: Katz & Murphy (1992) - Changes in Relative Wages, 1963-1987: Supply and Demand Factors
After 1980 demand for college-type skill rises steadily, overrunning earlier supply booms and pushing the wage premium up again. Most of the extra demand appears within industries, consistent with technology-driven up-skilling
Title: Autor, Levy & Murnane (2003)
The Skill Content of Recent Technological Change: An Empirical Exploration
Motivation: Autor, Levy & Murnane (2003) - The Skill Content of Recent Technological Change: An Empirical Exploration
Since the 1970s the “middle” of the U.S. job market has thinned out: office clerks and factory workers have become scarcer, while well-paid professional jobs have multiplied. This paper asks whether the spread of cheap computers is the reason.
Setting: Autor, Levy & Murnane (2003) - The Skill Content of Recent Technological Change: An Empirical Exploration
US Census and CPS micro-data from 1960-1998 are merged with occupation-level routine scores (from the Dictionary of Occupational Titles)
Adoption Pattern: Autor, Levy & Murnane (2003) - The Skill Content of Recent Technological Change: An Empirical Exploration
The 1st regression tests whether industries that were more routine-intensive in 1960 experienced faster computer uptake in subsequent decades; routine share in 1960 serves as a pre-treatment predictor
Re-allocation Tests: Autor, Levy & Murnane (2003) - The Skill Content of Recent Technological Change: An Empirical Exploration
(i) Industry-level test relates decade-by-decade changes in computer use to shifts in routine versus non-routine hours; (ii) the same specification is run separately for college and non-college workers to verify that job content, not education mix, is moving; (iii) a within-occupation version confirms that tasks inside job titles re-balance as computer use rises.
Robustness: Autor, Levy & Murnane (2003) - The Skill Content of Recent Technological Change: An Empirical Exploration
Common computer-price shock applies to all sectors; placebo decades show no effect; identical patterns appear across industries, education groups and occupations
Results: Autor, Levy & Murnane (2003) - The Skill Content of Recent Technological Change: An Empirical Exploration
Routine-heavy industries adopt computers earlier, automate clerical/assembly work and expand analytic and interactive tasks — both between and within occupations. This task re-allocation explains the bulk of the post-1970 surge in demand for college-educated labour.
Title: Autor & Dorn (2013)
The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market
Motivation: Autor & Dorn (2013) - The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market
Since 1980 the U.S. job distribution has formed a U-shape: middle-wage clerical posts shrank, while both high-pay professional roles and low-pay service jobs grew. The paper asks whether cheap computers, by automating routine office and production work, pushed displaced workers into in-person services
Setting: Autor & Dorn (2013) - The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market
The authors follow roughly millions of workers in every Census from 1950 to 2005 in the United States
Economic Mechanism Autor & Dorn (2013) - The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market
A goods sector combines routine labour with computer capital, while a face-to-face service sector uses only manual non-routine labour. If computers substitute for routine work more easily than households swap expenditures between goods and services, cheaper computers should push all low-skill labour toward services and raise wages at the top (abstract tasks).Factories and offices often rely on rule-based jobs like typing invoices or operating simple machines, and those tasks can now be done by cheap computers. By contrast, hairdressers, waiters or cleaners perform hands-on, people-facing work that machines still can’t handle. When computer prices fall, firms swap out their rule-based workers for machines. Displaced workers drift into in-person service jobs at the bottom of the pay scale, while demand (and pay) rises for highly educated people whose abstract, problem-solving tasks are helped—not replaced—by technology.
Empirical Tests: Autor & Dorn (2013) - The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market
a. Early adopters: First, see whether places that were loaded with routine jobs back in 1950 were the quickest to start using PCs once the technology became cheap in the 1990s.
b. Job reshuffle: Next, ask if those same places subsequently lost a bigger share of routine clerical and production posts and gained more low-skill service work between 1980 and 2005.
c. Wage and talent polarisation: Finally, test whether pay spreads out into a deep “U” in those areas—middle wages sag while both bottom and top rise—and whether they attract extra college-educated workers drawn by the growing need for abstract skills.
Robustness: Autor & Dorn (2013) - The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market
Instrument the 1980 routine share with the 1950 mix to avoid mechanical bias; control for entity and time fixed effects; replace PC use with hardware-investment data and obtain similar results.
Results: Autor & Dorn (2013) - The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market
Routine-heavy labour markets adopted PCs earlier, then shed clerical and factory jobs while expanding low-skill, face-to-face services such. Within these markets wages stretched into a pronounced U-shape—middle pay fell as both bottom and top wages rose—and the inflow of college-educated workers grew, signalling stronger demand for abstract, non-routine tasks.
Title: Goos et al. (2014)
Explaining Job Polarization: Routine-Biased Technological Change and Offshoring
Motivation: Goos et al. (2014) - Explaining Job Polarization: Routine-Biased Technological Change and Offshoring
Why have middle-wage clerical / production jobs vanished while both well-paid professional and low-paid service jobs expanded? Authors test whether automation of routine work and its offshoring abroad can jointly reproduce this polar shape without invoking shifts in education supply.
