Inequality's Roots: Beyond Technology - NYTimes.com Ask a policy maker or most economists what's driving the long rise in wage inequality in the United States, and they'll almost certainly mention technology (along with globalization). This leads them directly to more education as a solution, as higher-skilled workers are "complementary" to the technology trends that lie at the heart of their story. Economists talk about these dynamics under the rubric of SBTC, or skill-biased technological change. This theory maintains that as technology increasingly pervades the workplace, skills that are complementary to the new technology are in greater demand by employers. Those who bring such skills to the job market command a wage premium over those who don't. It is implicit in this hypothesis that the demand for technology-based skills has accelerated, thus lifting the premium and accelerating the shift to more highly skilled jobs. Ergo, the solution to rising inequality is more education. Yet as Eduardo Porter pointed out in an Economic Scene column, the evidence for SBTC's role in increasing inequality is hard to find in recent data: While both you and society will be better off if you get more education, it is not driving wage inequality. An important aspect of the column is that a couple of top economists often associated with the SBTC explanation stress this point. The tech story generally implies a rising college wage premium, yet that metric hasn't gone up much in recent years. The tech story also implies a shift in shares of employment to more highly skilled occupations; you see that in the 1990s, though not in the 2000s.1 So the obvious question is: if it's not unmet demand for technology-based skills, what is driving inequality? The economist David Card makes one important and, I'd say, widely accepted point: "I don't think the college-to-noncollege wage premium gives you any insight into why such a large share of the economic gains has accrued to such a tiny share of the population." If you drew a Venn diagram of intersecting circles of the college-educated and the top 1 percent, the latter would be a small subset of the former. Larry Mishel of the Economic Policy Institute and his colleagues have been on this research beat for a while: As Mr. Porter noted: Clearly, the diagnosis matters a great deal, because it drives the prescription. Mr. Porter correctly stresses that "there is good reason to resist the proposition that education and technology are solely responsible for growing inequality," adding, "It provides political leaders an excuse to cast the problem as beyond the reach of policy." David Autor, an M.I.T. economist who is a central participant in these debates, adds: "It can suck all the air out of the conversation ... all economists should be pushing back against this simplistic view." I couldn't agree more. To be clear, access to higher education is an essential mobility inducer for children whose social status will make it hard for them to get to and complete college. If anything, those barriers have grown higher with inequality, and policy must push harder to overcome them. But if we're serious about tackling inequality, we'll need to think more about full employment, trade (and the trade deficit), bargaining power, and the other factors on Mr. Mishel's list. I'm talking about the United States data. In the British data, you do see such occupational shifts in the 2000s.