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Shifts and twists in the relative productivity of skilled labor

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Author Info
Dupuy, Arnaud
Marey, Philip S.

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Abstract

Skill-biased technical change is usually interpreted in terms of the efficiency parameters of skilled and unskilled labor. This implies that the relative productivity of skilled workers changes proportionally in all tasks. In contrast, we argue that technical changes also affect the curvature of the distribution of relative productivity. Building on Rosen (1978) [Rosen, S., 1978. Substitution and the division of labor. Economica 45, 235-250] tasks assignment model, this implies that not only the efficiency parameters of skilled and unskilled workers change, but also the elasticity of substitution between skill types of labor. Using data for the United States between 1963 and 2002, we find significant empirical support for a decrease in the elasticity of substitution at the end of the 1970s followed by an increase at the beginning of the 1990s. This pattern of the elasticity of substitution has contributed to the labor productivity slowdown in the mid-1970s through the 1980s and to a speedup in the 1990s.

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Article provided by Elsevier in its journal Journal of Macroeconomics.

Volume (Year): 30 (2008)
Issue (Month): 2 (June)
Pages: 718-735
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Handle: RePEc:eee:jmacro:v:30:y:2008:i:2:p:718-735

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  1. Lex Borghans & Bas ter Weel, 2009. "Understanding the Technology of Computer Technology Diffusion," CPB Discussion Papers 117, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  2. Borghans Lex & Weel Bas ter, 2008. "Understanding the Technology of Computer Technology Diffusion: Explaining Computer Adoption Patterns and Implications for the Wage Structure," Research Memoranda 009, Maastricht : ROA, Research Centre for Education and the Labour Market. [Downloadable!]
    Other versions:
  3. Cörvers, Frank & Dupuy, Arnaud, 2009. "Estimating Employment Dynamics across Occupations and Sectors of Industry," IZA Discussion Papers 4428, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Pyyhtiä, Ilmo, 2007. "Why is Europe lagging behind?," Research Discussion Papers 3/2007, Bank of Finland. [Downloadable!]
  5. Dupuy, Arnaud, 2008. "The Assignment of Workers to Tasks, Wage Distribution and Technical Change: A Critical Review," IZA Discussion Papers 3379, Institute for the Study of Labor (IZA). [Downloadable!]
  6. Bas Straathof, 2006. "Schooling inequality and the rise of research," CPB Discussion Papers 74, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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  7. Cörvers Frank & Dupuy Arnaud, 2009. "Estimating employment dynamics across occupations and sectors of industry," Research Memoranda 014, Maastricht : ROA, Research Centre for Education and the Labour Market. [Downloadable!]
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