Lifetime learning , biased technological change and the evolution of wages in the U . S . 1960 - 1990

Stylized facts derived from wage pattern analysis in the U.S. point to the importance of non-standard explanations for changes of relative wage. Learning while working is predicted to be able to account for wage divergence so far unexplained. Increases in productivity differ among individuals due to heterogeneity in learning capabilities which excludes a group of workers from training. This selectivity can explain relative wage changes within as well as between groups. Wage divergence within groups is an equilibrium property in the 1970s. It was not observed before since other relative wage neutral investments were more profitable. The introduction of new production processes at the beginning of the 1980s leads to either a limited but permanent or unlimited increase in relative wages between groups. The latter happens if labor is substituted for by human capital and physical capital. It is shown how to empirically distinguish between these explanations.