We analyze the effects of automation on the wages of high-skilled and low-skilled workers and thereby on the evolution of wage inequality. Our model explains the simultaneous presence of i) increasing per capita income, ii) declining real wages of low-skilled workers, and iii) an increasing...

We analyze the effects of automation on the wages of high-skilled and low- skilled workers and thereby on the evolution of wage inequality. Our model explains the simultaneous presence of i) increasing per capita GDP, ii) de-clining real wages of low-skilled workers, and iii) an increasing...

I propose a new explanation for the large productivity gaps between agriculture and nonagriculture observed in developing countries, namely that the elasticity of substitution between skilled and unskilled workers is higher in agriculture than in nonagriculture. I estimate the elasticities in a...