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Skill-Biased Technological Change and the Business Cycle

Author

Listed:
  • Almut Balleer

    (IIES Stockholm and Aachen University)

  • Thijs van Rens

    (University of Warwick, Centre for Macroeconomics, IZA, and CEPR)

Abstract

Over the past two decades, technological progress in the United States has been biased toward skilled labor. What does this imply for business cycles? We construct a quarterly skill premium from the CPS and use it to identify skill-biased technology shocks in a VAR with long-run zero and sign restrictions. Hours fall in response to skill-biased technology shocks, indicating that part of the technology-induced fall in hours is due to a compositional shift in labor demand. Investment-specific technology shocks reduce the skill premium, indicating that capital and skill are not complementary in aggregate production. © 2013 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Almut Balleer & Thijs van Rens, 2013. "Skill-Biased Technological Change and the Business Cycle," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1222-1237, October.
    • Handle: RePEc:tpr:restat:v:95:y:2013:i:4:p:1222-1237
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    More about this item

    Keywords

    skill-biased technology; skill premium; VAR; long-run restrictions; capital-skill complementarity; business cycle;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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