Skills, Tasks and Technologies: Implications for Employment and Earnings

In an examination of the returns to skills and the evolution of earnings inequality, Daron Acemoglu and David Autor argue that despite past successes of this model, empirical developments of the last three decades ought to be underscored.  These developments include (1) significant declines in real wages of low skill workers, particularly low skill males; (2) non-monotone changes in wages at different parts of the earnings distribution during different decades; (3) broad-based increases in employment in high skill and low skill occupations relative to middle skilled occupations (i.e., job polarization); (4) rapid diffusion of new technologies that directly substitute capital for labor in tasks previously performed by moderately-skilled workers; and (5) expanding offshoring opportunities, enabled by technology, which allow foreign labor to substitute for domestic workers specific tasks.