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The skill bias of technological change and the evolution of the skill premium in the US since 1970

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  • Richter Barbara

    (KfW)

Abstract

Using a two-sector model with potentially different capital shares in each sector, I show that the evolution of the skill premium from 1970 to 2005 is consistent with skill-neutrality and even a mild unskill-bias of technological change. The main channel of adjustment to changes in labor supply is instead via the reallocation of capital. New investment occurs predominantly in the skilled sector, to the detriment of the unskilled sector of the economy. This result is shown both theoretically in a simple model and in a quantitative exercise using data on the US economy.

Suggested Citation

  • Richter Barbara, 2014. "The skill bias of technological change and the evolution of the skill premium in the US since 1970," The B.E. Journal of Macroeconomics, De Gruyter, vol. 14(1), pages 379-417, January.
    • Handle: RePEc:bpj:bejmac:v:14:y:2014:i:1:p:39:n:18
    DOI: 10.1515/bejm-2013-0116
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