Technological progress and wage inequality in an economy with a segmented labor market

We examine the effect of technological progress on the wage gap between skilled and unskilled labor. Furthermore, we apply Beladi et al.'s (2012) analysis of technological progress and informal workers to the problem of wage inequality between skilled and unskilled labor. We conclude that technological progress in the organized sector will harm informal workers, while progress in the unorganized sector will benefit them. Additionally, we find that the effect of labor-saving technological progress on the wage gap depends on the industries' relative factor intensities.