The Assignment of Workers to Tasks, Wage Distribution, and Technical Change: A Critical Review
AbstractThis article reviews the literature on two-sided atomless assignment models of workers to tasks. Using simple parametric examples, the fundamental differences between the comparative-advantage and the scale-of-operations models are illustrated. Holding the distributions of abilities and tasks and the production function of worker-task pairs constant, the two principles are shown to produce different wage distributions and wage inequality. These models are useful to evaluate the general equilibrium effect of technical change on the wage structure. In all models, Skill Biased Technical Change that impacts the production function of worker-task pairs leads to rising wage inequality.