The Hidden Increase in Wage Inequality: Skill-biased and Ability-biased Technological Change

This study provides strong evidence for an increase in wage inequality induced by skillbiased technological change in the UK manufacturing industry between 1991 and 2006. Using individual level data from the BHPS and industry level data from the OECD, wage regressions are estimated which identify the eff ect of innovative activity on wages – the personal innovation wage premium – for university and less educated workers. Innovative activity is defi ned by R&D expenditure and patent applications to measure innovation input and innovation output, respectively. Using diff erent estimation methods for panel data, such as Fixed eff ects, Random eff ects, Mundlak and Hausman- Taylor models, additionally to pooled OLS allows controlling for both industry-specifi c and individual ability. Using R&D expenditure as a measure for innovative activity additionally provides evidence for ability-biased technological change while patent applications do not support this hypothesis.Wage inequality; skill-biased technological change; ability-biased technological change; United Kingdom

Migration Magnet: The Role of Work Experience in Rural-Urban Wage Diff erentials in Mexico

This study estimates separate selectivity bias corrected wage equations for formal and informal workers in rural and urban Mexico using data from the Mexican Family Life Survey (MxFLS). We control for diff erent potential selection patterns using Probit and Multinominal logit models in the fi rst step in which health, personality traits and family characteristics serve as exclusion restrictions for working per se and working in the formal sector. Oaxaca-Blinder Decompositions show that rural-urban wage inequality in the formal and informal sector is determined by diff erences in observable human capital. In the informal sector, the wage diff erential is mainly explained by diff erences in returns to experience. Furthermore, we analyse rural-to-urban migrants‘ labour market performance. The fi ndings suggest that rural-to-urban migration will continue and the informal sector will further increase.Returns to experience; rural-urban wage diff erentials; informality; internal migration; Mexico