The resurgence of inequality since the late 1970s in rich countries is one of today’s most widely discussed and controversial issues. The CBTC ERC-funded project offers an original perspective on the explosion of wage inequality in the United States and the divergent evolution in Europe, by bringing productive dialogue insights from sociology, economics, and political science regarding what drives economic inequality. Most economists argue that computerization has been primarily responsible, while on the other side of the argument are sociologists and political scientists who stress the role of political forces in the evolution process of wages. While the distinction between technology and political forces is currently clear-cut, I put forward a new perspective that underlines the interactions between technology and politics in the wage-determination process. My general argument is that computerization power on the wage structure is governed by the politics of class, which can institutionalize norms of equity, and by the politics of production in the workplace, which shapes workers’ bargaining power.
In my previous work I coined the term “Class-Biased Technological Change” (CBTC) to illuminate how computerization inversely affected workers’ compensation and corporate profits, partly because innovation in Information and Communication Technology (ICT) accompanies or spurs union decline (Kristal, ASR 2013). In the CBTC ERC-funded project I advance a new explanation to two unsettled questions regarding the role of computerization in rising wage inequality:
Q1: How can computers, which have spread across workplaces in all rich countries, explain the divergent wage inequality trends in Europe and the US?
CBTC project: It cannot, politics matter. Class politics (i.e., labor party, labor unions, wage-setting institutions) moderate the effects of technological change on wages by stimulating norms of fair pay and equity.
Q2: Are skills and market forces the only mechanisms behind the well-known observed positive correlation between computers and wages?
CBTC project: No, politics matter. The computer revolution has increased wage inequality also through intensifying the unequal power relations amongst jobs.