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Skill-Biased Structural Change

Author

Listed:
  • Francisco J Buera
  • Joseph P Kaboski
  • Richard Rogerson
  • Juan I Vizcaino

Abstract

Using a broad panel of advanced economies, we document that increases in GDP per capita are associated with a systematic shift in the composition of value added to sectors that are intensive in high-skill labour, a process we label as skill-biased structural change. It follows that further development in these economies leads to an increase in the relative demand for skilled labour. We develop a quantitative two-sector model of this process as a laboratory to assess the sources of the rise of the skill premium in the U.S. and a set of ten other advanced economies, over the period 1977 to 2005. For the U.S., we find that the sector-specific skill neutral component of technical change accounts for 18–24% of the overall increase of the skill premium due to technical change, and that the mechanism through which this component of technical change affects the skill premium is via skill-biased structural change.

Suggested Citation

  • Francisco J Buera & Joseph P Kaboski & Richard Rogerson & Juan I Vizcaino, 2022. "Skill-Biased Structural Change," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(2), pages 592-625.
    • Handle: RePEc:oup:restud:v:89:y:2022:i:2:p:592-625.
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    File URL: http://hdl.handle.net/10.1093/restud/rdab035
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    More about this item

    Keywords

    Structural change; Skill premium;

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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