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Skills' Substitutability and Technological Progress: U.S. States 1950-1990

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Author Info
Ciccone, Antonio
Peri, Giovanni

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Abstract

In this article we estimate the long-run aggregate elasticity of substitution between skilled and unskilled workers. This is an important parameter as it allows us to compute the skill biased technological progress (SBTP) from the evolution of relative wages. However, it is hard to estimate because skill supply is endogenous. We tackle the task by using instruments proposed by the labor literature as sources of exogenous variation of schooling achievements across U.S. States. They are the state laws on Compulsory Schooling Attendance and on Child Labor. We then calculate SBTP and, using growth accounting, we calculate Hicks neutral technological progress (HNTP) for U.S. states in each decade between 1950 and 1990.

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Paper provided by CESifo GmbH in its series CESifo Working Paper Series with number CESifo Working Paper No. 1024.

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Date of creation: 2003
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Handle: RePEc:ces:ceswps:_1024

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Related research
Keywords: elasticity of substitution skill biased technology skilled and unskilled workers U.S. states

Find related papers by JEL classification:
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General
R10 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General

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References listed on IDEAS
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  1. Gordon, Robert J, 2000. "Does the 'New Economy' Measure up to the Great Inventions of the Past?," CEPR Discussion Papers 2607, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Francesco Caselli & Wilbur John Coleman II, 2000. "The World Technology Frontier," NBER Working Papers 7904, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Douglas Gollin, 2002. "Getting Income Shares Right," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 458-474, April. [Downloadable!] (restricted)
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  4. Fuller, Wayne A, 1977. "Some Properties of a Modification of the Limited Information Estimator," Econometrica, Econometric Society, vol. 45(4), pages 939-53, May. [Downloadable!] (restricted)
  5. Chang-Tai Hsieh, 2002. "What Explains the Industrial Revolution in East Asia? Evidence from the Factor Markets," American Economic Review, American Economic Association, vol. 92(3), pages 502-526, June. [Downloadable!] (restricted)
  6. John C. Chao & Norman Rasmus Swanson, 2004. "Consistent Estimation with a Large Number of Weak Instruments," Yale School of Management Working Papers ysm374, Yale School of Management. [Downloadable!]
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