Abstract
This article provides empirical evidence of the link between technological change and overall income inequality in 14 EU countries. The analysis begins by testing the skill-biased technological change (SBTC) hypothesis in sectors with different levels of technology intensity. After confirming the skill complementarity of technology and the predominantly skill-replacing character of investment, the analysis turns to sectoral changes in skilled-labour demand as a possible determinant of income inequality. It finds a non-linear relationship between SBTC and inequality in five of the eight sectors considered, suggesting an inverted U-shaped pattern that can be explained by stages in labour demand and supply adjustments over time.