ABSTRACT

The United States experienced a considerable increase in inequality during the 1980s, with the major increase in inequality occurring within, rather than across, industries.1 Although several studies have investigated the possible causes of this decline in the relative economic fortunes of the less-skilled in the United States their conclusions differ quite considerably. For example: Feenstra and Hanson (1995 and 1996a, b) claim that increased imports explain much of the rise in US inequality; Machin and Van Reenen (1998) find that the main cause is skill-biased technological change; and Haskel and Slaughter (1997) argue that it is the sectoral bias of skill-biased technological change that matters.