Documents Carnegie-Rochester Conference Series on Public Policy 2 results

"Over the past 25 years, the US and the UK experienced sharp increases in wage inequality and rapid deunionization. We argue that these two phenomena are related, and that skill-biased technical change has been an important factor in deunionization as well as in the rise in inequality. Skill-biased technical change causes deunionization because it increases the outside option of skilled workers, undermining the coalition among skilled and unskilled worker in support of unions. Our approach implies that although deunionization is not the underlying cause of the increase in inequality, it amplifies the direct effect of skill-biased technical change by removing the wage compression imposed by unions. We also show that deunionization may happen inefficiently."

"The factory system, which arose with the British Industrial Revolution, was responsible for bringing about the separation of the location of consumption (the household) and that of production (the plant or office). This separation has had large effects on economic welfare. The reasons behind the emergence of the factory system are analyzed here, and a new interpretation is proposed, based on the need to divide up the growing knowledge base of production in an age of technological advances. The possibilities and implications of telecommuting as a reversal of this trend are examined."