ABSTRACT
This chapter addresses the specific points before turning to the some of the interesting and more general issues raised by Gilbert L. Skillman. The real test of competing theoretical accounts is “the ability to explain the complex empirical record regarding dynamic patterns in unemployment and wage dispersion”. The mainstream explanation of increasing wage inequality has focused mainly on the effects of skill-biased technical change. The real strength of the skill-bias hypothesis may have been that within a standard neoclassical setup it is hard to find other explanations for the rise in both the relative employment and the relative wage of high-skill workers. Standard measures of skill exhibit rapid growth only in the early 1980s recession. Wolff’s analysis “suggests that the bias in technological change toward workers with cognitive skills was strongest in the 1960s but fell rather sharply in the 1970s and again in the 1980s”.
