developed countries may have led to more skill-biased technological change than otherwise would have occurred Acemoglu recognizes that more research is needed to determine whether these indirect effects are operating and, if they are, the sizes of these effects, but looking at how technological change responds to economic conditions may begin to solve some heretofore puzzling aspects of recent labor market changes Sources: Daron Acemoglu, “Technical Change, Inequality, and the Labor Market,” Journal of Economic Literature, 40:1 (March 2002): 7–73; John Bound and George Johnson, “What are the Causes of Rising Wage Inequality in the United States,” Economic Policy Review, Federal Reserve Bank of New York, 1:1 (January 1995): 9–17 and personal interview ANSWERS TO TRY IT! PROBLEMS An increase in the demand for new housing would shift the demand curve for construction workers to the right, as shown in Figure 12.11 "Changes in the Demand for and Supply of Labor", Panel (a) Both the wage rate and the employment in construction rise A larger number of women wanting to work in construction means an increase in labor supply, as shown in Figure 12.11 "Changes in the Demand for and Supply of Labor", Panel (c) An increase in the supply of labor reduces the wage rate and increases employment Improved training would increase the marginal revenue product of construction workers and hence increase demand for them Wages and employment would rise, as shown in Figure 12.11 "Changes in the Demand for and Supply of Labor", Panel (a) Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 666