October 31, 2010
On Friday, Morning Edition featured a debate on trade between former Bush administration economist Mathew Slaughter and Thea Lee, an economist with the AFL-CIO. [Disclosure: Ms. Lee is a personal friend.] The discussion allowed Mr. Slaughter to have the last word, in which he proclaimed:
“One is most of the research to date that Thea cites has concluded that it’s technology innovations of many kinds, that tend to favor demand for skilled workers that has put pressure on the wages of so many Americans.
So from a policy perspective, a question is, well, what do we want to do about that? Do you want to get rid of the computers that we’ve created over the past 30 or 40 years?”
Actually the economic research does not provide a compelling case that technology, rather than trade, has been the major factor driving inequality. The biggest rise in inequality between college and non-college educated workers occurred in the 80s, before the explosion of computerization and the uptick in productivity growth. In the 00s, there was no increase in the college-non-college pay gap. The only real gainers in that decade were workers with advance degree. This pattern in inequality is difficult to reconcile with a technology story.
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