Abstract
Technical change, even if it is limited in scope, can have effects that ripple throughout the economy. Here a flexible and tractable framework, with heterogeneous workers and technologies and many tasks, is used to analyze the general equilibrium effects of technical change for a limited set of tasks. The equilibria feature positively assortative matching between workers and technologies. The effects of technical change on employment, output, prices, and wages up and down the skill and technology ladders are sharply characterized. The effects of low-skill immigration, minimum-wage legislation, and international trade are also described.
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