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Shifts and twists in the relative productivity of skilled labor

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  • Dupuy, Arnaud
  • Marey, Philip S.

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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Web page: http://www.elsevier.com/locate/inca/622617

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Cited by:
  1. Pyyhtiä, Ilmo, 2007. "Why is Europe lagging behind?," Research Discussion Papers 3/2007, Bank of Finland.
  2. Arnaud Dupuy, 2008. "The Assignment of Workers to Tasks, Wage Distribution, and Technical Change: A Critical Review," Journal of Income Distribution, Journal of Income Distribution, vol. 17(3-4), pages 12-36, September.
  3. Bas Straathof, 2006. "Schooling inequality and the rise of research," CPB Discussion Paper 74, CPB Netherlands Bureau for Economic Policy Analysis.
  4. Bas ter Weel & L. Borghans, 2009. "Understanding the technoloy of computer technology diffusion: explaining computer adoption patterns and implications for the wage structure," CPB Discussion Paper 117, CPB Netherlands Bureau for Economic Policy Analysis.
  5. 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).
  6. DUPUY Arnaud & SORENSEN Todd, 2013. "On Input Market Frictions and Estimation of Factors' Demand," CEPS/INSTEAD Working Paper Series 2013-13, CEPS/INSTEAD.
  7. Carmen Cristina Albu, 2012. "Valences Of The Diagnosis And Identification Methods Of The Cultural Phenomenon In Romanian Tourism Agencies," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 3(40), pages 147-158.

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