  Technological change is responsible for major changes in the labor market.
One of the offspring of technological change is the SBTC, which is for many
economists the leading cause of the increasing wage inequality. However,
despite that the technological change affected similarly the majority of the
developed countries, nevertheless, the level of the increase of wage inequality
wasn't similar. Following the predictions of the SBTC theory, the different
levels of inequality could be due to varying degrees of skill inequality
between economies, possibly caused by variations in the number of skilled
workers available. However, recent research shows that the difference mentioned
above can explain a small percentage of the difference between countries.
Therefore, most of the resulting inequality could be due to the different ways
in which the higher level of skills is valued in each labor market. The
position advocated in this article is that technological change is largely
given for all countries without much scope to reverse. Therefore, in order to
illustrate the changes in the structure of wage distribution that cause wage
inequality, we need to understand how technology affects labor market
institutions.In this sense, the pay inequality caused by technological progress
is not a phenomenon we passively accept. On the contrary, recognizing that the
structure and the way labor market institutions function is largely influenced
by the way institutions respond to technological change, we can understand and
maybe reverse this underlying wage inequality.
