Essays on income inequality and monetary policy

My thesis examines the nature and causes of income inequality in a developing-country context. In particular, it investigates the roles of education and technology in wage distribution in Thailand, which serves as an interesting case study. Over the past three decades, economic development has led to a supply of higher educated wage earners in that country. Simultaneously, demand for labour with different educational levels has been altered by the adoption of skill-biased technological change caused by the transition from labour-intensive manufacturing to more technologically advanced industries. Similar to many developing countries, wage inequality, although persistently at high levels, has consistently declined over the entire period.

To understand how education and technology have shaped wage inequality in Thailand, I apply the task-based model of the allocation of skills to tasks developed by Acemoglu and Autor (2011) to Thai labour force survey data. Changes in education are defined by the changing shares of wage earners by educational level. For technology, I extend Acemoglu and Restrepo’s (2018) task-based framework to measure technological changes in Thailand, leveraging wage bills by industry data. Preliminary evidence suggests that the observed changes in wage inequality and the occupational structure of employment in Thailand are broadly in line with theoretical predictions. In other words, the evolution of wage inequality in Thailand accords well with the race between education and technology framework.

My thesis belongs to the growing body of literature concerning what shapes the evolution of inequality in developing countries. It offers a framework for understanding changes in wage inequality through education and technology. Empirically, it provides a method for how to apply the task-based model to labour data and offers a novel method for measuring technological changes.