Earnings inequality is on the rise in many countries, at all levels of development. Historically, growing inequality within countries has been linked to the dynamics of technological advancement. This link has traditionally been explained by the growth in demand for skilled workers that new technologies bring. As this increases the earnings of highly skilled occupations relative to other occupations, inequality between workers increases. However, this cannot explain why jobs and earnings in middle-income occupations have declined, while they have increased among both low- and high-income occupations, as has recently been the case in many industrialized countries.
Many of the “lost” jobs in the middle require performing routine tasks, so they may have been easily replaced by automation or outsourced to economies with lower wages. This is mirrored by an increase in highly personalized service jobs that require face-to-face contact and creative jobs for highly qualified professionals. This changing nature of work has been at the centre of recent analysis explaining the distribution of earnings in wealthy countries, but not developing countries.
This project aims to fill this knowledge gap by focusing on how the changing nature of work affects earnings inequality in developing countries. Through in-depth examinations of 11 countries in Africa, Asia, and Latin America as well as cross-country comparative studies, it investigates the impact that new technologies and globalization have on workers’ earnings, and how that, in turn, impacts earnings inequality (often the biggest driver of equality outcomes).
This project builds on UNU-WIDER’s recent work on the drivers of inequality outcomes in the world’s largest emerging market economies: Brazil, China, India, Indonesia, Mexico, and South Africa, by initiating a new economic literature on the link between changes in the task composition of jobs and changes in earnings inequality within developing economies.
- How is the nature of work changing during the development path followed by different countries and regions of the world and how is this impacted by the globalization of trade and new technology?
- Do factors like a country’s position in the global value chain, access to technology, and labour market institutions matter?
- To what extent are changes in employment and earnings of more (and less) routine jobs affecting inequality in the Global South?
- How does the nature of earnings inequality in developing countries differ from the experience of developed countries?
Watch this space
All papers, data, opinion pieces and opportunities to engage relating to this project will be available on this web page.
The project will identify the factors that contribute to earnings inequalities and point to policy measures which can help make labour markets more inclusive in the context of the changing nature of work. It specifically addresses SDG 10, reduced inequalities. https://unu.edu/explore/sustainable-development-goal-10