https://macropaperwarehouse.com/authors/oren-danieli/Oren DanieliHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/skill-replacing-technology-and-bottom-half-inequality/https://macropaperwarehouse.com/papers/skill-replacing-technology-and-bottom-half-inequality/<p>This paper proposes a model of skill-replacing routine-biased technological change (SR-RBTC) to explain patterns in U.S. bottom-half wage inequality that standard RBTC models cannot account for. The central departure from prior models (e.g., Acemoglu and Autor 2011; Cortes 2016) is that technology substitutes the usage of skill within routine occupations rather than replacing routine workers wholesale. Formally, SR-RBTC is characterized by epsilon &lt; 0, where epsilon = d² log phi_R / (d theta_i d tau), meaning productivity gains in the routine occupation are disproportionately concentrated among lower-skilled workers, compressing skill-wage gradients within that occupation.</p>