Technological Change, Inequality and Skills

The rise of inequality in recent decades has led to the polarization of politics and social instability across developed and developing nations.  Explaining the origins of the increase in inequality has become a subject of intense debate among scholars.  A commonly accepted hypothesis is that new technologies are complementary to high skilled labor and at the same time tend to displace the lower skilled.  This increases relative demand for the highly skilled and exacerbates inequality in labor incomes.  This basic idea gives rise to a strand of the literature that examines more complex interactions between the technological environment and the allocation of workers to jobs according to their skills.

The fundamental assumption of models in this literature is the complementarity of factors. Complementarity can occur between technology and specific skills, capital and skills, or between team members. The basic outcome of complementarity is that the most efficient teams are formed only by workers with the same level of skill, that is, the segregation or stratification of skills.  The intuition is that if skill levels were mixed in a given team, lower skilled workers would drag down the productivity of the highly skilled.  The variation of technology in the model maintains the feature that skills are segregated but tends to amplify income inequality.  The reason is technological change tends to favor highly skilled workers because for them the cost of learning the new technology is lower than the cost for low skilled workers.

These models bring about important insights for developing countries. For example, they can explain whether or not a technology developed in a developed country can actually improve the overall productivity of a developing country.  It is argued that developed countries tend to create technologies that are complementary to high skilled workers. But if developing countries do not have the necessary skill base to operate the new technology, its introduction may actually lead to a relative decline in productivity.  Moreover if developing countries have a smaller proportion of workers who can operate a new technology, the effect on income inequality is likely to be worse than in developed countries.

Acemoglu, Daron and Fabrizio Zilibotti (2001) “Productivity Differences,” Quarterly Journal of Economics, 116(2): 563–606.

Acemoglu, Daron (2002) “Technical Change, Inequality, and the Labor Market“, Journal of Economic Literature, 40(1): 7-72.

Basu, Susanto and David N. Weil (1998) “Appropriate Technology and Growth“. Quarterly Journal of Economics, 113(4): 1025-1054.

Caselli, Francesco (1999) “Technological revolutions”, American Economic Review, 89(1): 78–102.

Garicano, Luis and Esteban Rossi-Hansberg (2006) “Organization and Inequality in a Knowledge Economy” Quarterly Journal of Economics, 121(4): 1383–1435.

Kremer, Michael  (1993) “The O-Ring Theory of Economic Development“, Quarterly Journal of Economics, 108(3): 551-575.

La Porta, Rafael and Andrei Shleifer (2014) Informality and Development“, Journal of Economic Perspectives, 28(3): 109-26.

Lucas, Robert E. Jr (1978) “On the Size Distribution of Business Firms”, Bell Journal of Economics, 9(2): 508–523.

Porzio, Tommaso (2016) “Distance to the Technology Frontier and the Allocation of Talent“, Working Paper.

New Working Papers July 2016

The following working papers have recently been added to our working papers page.

Ahlin, Christian and Hyeok Jeong (2015) “The Conditional Gini: Estimation and Application to the Relationship between Wealth, Financial Use, and Income Inequality

Ellis, Christopher, Jon C. Thompson and Jiabin Wu (2016) “Complementarities, Coordination, and Culture

Guardado, Jenny (2016) “Office-Selling, Corruption, and Long-Term Development in Peru

Lake, James and Santanu Roy (2015) “Are global trade negotiations behind a fragmented world of “gated globalization”?

Lake, James and Maia K. Linask (2016) “Could tariffs be pro-cyclical?



Global Challenges Research Fund (GCRF)

The Global Challenges Research Fund (GCRF) is a new five-year £1.5 billion funding stream, announced as part of the Government’s 2015 spending review. It forms part of the UK’s Official Development Assistance commitment, to support cutting-edge research which addresses the problems faced by developing countries.

Funding opportunities

Initial GCRF funding opportunities are:

Please follow the link for further details.

6 Doctoral Scholarships

The Institute for Employment Research (IAB) and the School of Business and Economics of the University of Erlangen-Nuremberg have set up a joint doctoral programme in labour market research.

  • The course programme promotes theoretical and empirical methods at an advanced level. Additionally, applicants are granted access to the excellent data resources (administrative and survey data) of the IAB on employment and social security. Doctoral students benefit from the professional research environment that enables them to apply their knowledge in academic and applied empirical research.
  • We address outstanding graduates from economics, sociology or other social sciences who hold a master degree or diploma. Applicants are expected to submit a proposal addressing empirical and theoretical research questions in the field of labour market research or the development of the required statistical-econometric methods.

IAB supports scholarship holders with a scholarship of 1,150 euros per month. In accepting the scholarship, the scholarship holder commits him/herself to talking part in the study programme and to limiting secondary, income-generating activities to a maximum of 10 hours per week (i.e. a “quarter job” according to the German civil service).

The scholarship is granted for the period of a year. The maximum period of support is 3 years. Before each period of support comes to an end, an assessment will take place as to whether further support is justified. To this end, each scholarship holder submits an intermediate report each year documenting the extent to which the project has progressed, as well as specifying an updated schedule/further steps to be completed.

Additionally, each scholarship holder receives 1,800 Euros a year for the participation in conferences and training and other dissertation relevant expenditures. For research visits abroad GradAB students can obtain additional financial support. GradAB doctoral students with a child under three years of age are offered a part-time scholarship with a duration of up to five years.

This scholarship is linked to the Graduate Programme (GradAB).

Application Deadline: 14 October 2016.

For more information about studies please click here.

Download more information

Area of Study or Research:

  • Economics
  • Sociology & Anthropology

Application Requirements:

  • Personal data/curriculum vitae
  • Personal Statement
  • Inmatriculation certificates
  • Transcript of records
  • Outline of the project

Post-doctoral researcher position: Modelling economic and environmental effects of trade in the global bioeconomy

The Center for Development Research (ZEF) and the Institute for Food and Resource Economics (ILR) at the University of Bonn invite applications for a full time postdoctoral researcher position in model-based trade and environmental policy analysis starting October 1st (2016) for 1 year and 8 months (extension for further qualification possible). The selected candidate will conduct research in the project “Sustainable trade and innovation transfer in the Bioeconomy” funded by the German Federal Ministry of Education and Research. The project aims at developing a better understanding of how and under what conditions bio-based transformation can lead to reducing the environmental footprint of the global bioeconomy with a particular focus on socio-economic and environmental effects in ecologically sensitive landscapes of the global South. Research will be conducted in collaboration with research groups at the University of Bonn, the NRW Bioeconomy Science Center (BioSC) and international partners using existing global trade models, such as GTAP. A focus lies on spatially disaggregating land use impacts of global trade scenarios at subnational levels in selected regions in Sub-Saharan Africa, Southeast Asia, and South America.


• Doctoral degree in economics, agricultural economics, or related fields

• Demonstrated modelling/programming skills, for example using GAMS, and experience working with Computable General Equilibrium (CGE) or environmentally extended MultiRegion Input-Output models.

• Willingness to engage in collaboration across scientific disciplines

• Excellent English oral and writing skills

• Good intercultural communication and teamwork skills.

Remuneration will be according to TV-L (E13) (German salary system for university-based researchers). Please send your letter of interest, a detailed resume, a relevant recent research product, and names and contact information of two academic references in a single PDF document by E-mail to Mr. James Henderson at:

Application deadline: Until position is filled

The Center for Development Research ( is an international and interdisciplinary academic research institute within the Rheinische Friedrich-Wilhelms-University of Bonn, Germany. ZEF is an equal opportunity employer and particularly welcomes applications from female candidates. Please note that only short listed candidates will be contacted.

2016 BARCELONA WORKSHOP ON REGIONAL AND URBAN ECONOMICS: Innovation, networks and the geography of knowledge diffusion

AQR-IREA is pleased to announce the 2016 Barcelona Workshop on Regional and Urban Economics, to be held in Barcelona on October 27th-28th, 2016. The workshop will be focused on innovation and the spatial diffusion of knowledge with emphasis in collaboration networks. Its aim is to bring together researchers in urban and regional economics who are working in topics where the broad concept of the geography of innovation plays a fundamental role. Particular attention will be paid to papers dealing with the mechanisms and actors of knowledge diffusion (knowledge spillovers, networks, technological collaboration, and knowledge relatedness). Although the Workshop will focus on empirical papers, theoretical studies are also welcome.

Keynote speakers:

Maryann Feldman (Department of Public Policy at the University of North Carolina)

Karen Maguire (Regional Innovation Unit of the OECD Regional Development Policy Division)

Audience: We will accommodate around 8-10 papers, to be presented in plenary sessions that will complement the keynote speakers’ presentation.

Submission: Papers should be sent in pdf format to before September 9th 2016. Extended abstracts or incomplete drafts will also be considered, but full papers will be favoured.

Travel and accommodation costs for presenters of accepted papers will be covered by the organisers.

Deadline for papers submission: September 9th 2016

Notification of acceptance: September 16th 2016

Preliminary programme: September 30th 2016

Final programme: October 15th 2016

Organising Committee

Rosina Moreno (coordinator), Lorena d’Agostino, Enrique López-Bazo, Ernest Miguélez and Jordi Suriñach.

Scientific Committee

Corinne Autant-Bernard, Ron Boschma, Ricardo Crescenzi, Jose García-Quevedo, Jackie Krafft, Francesco Lissoni, Enrique López-Bazo, Ernest Miguélez, Rosina Moreno, Mercedes Teruel, Stefano Usai.

Further information at or contact .