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Shifts and Twists in the Relative Productivity of Skilled Labor

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  • Dupuy, Arnaud

    ()
    (CEPS/INSTEAD)

  • Marey, Philip S.

    ()
    (Maastricht University)

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’s (1978) 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 70s followed by an increase at the beginning of the 90s. This pattern of the elasticity of substitution has contributed to the labor productivity slowdown in the mid 70s through the 80s and to a speedup in the 90s.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2694.

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Length: 36 pages
Date of creation: Mar 2007
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Publication status: published in: Journal of Macroeconomics, 2008, 30 (2), 718-35
Handle: RePEc:iza:izadps:dp2694

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Keywords: cointegration and change in regime; SBTC; assignment; output growth;

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Cited by:
  1. Cörvers Frank & Dupuy Arnaud, 2009. "Estimating employment dynamics across occupations and sectors of industry," ROA Research Memorandum, Maastricht University, Research Centre for Education and the Labour Market (ROA) 011, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  2. Arnaud Dupuy & Todd Sorensen, 2014. "On Input Market Frictions and Estimation of Factors' Demand," Southern Economic Journal, Southern Economic Association, Southern Economic Association, vol. 80(3), pages 772-781, January.
  3. 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, Journal of Income Distribution, vol. 17(3-4), pages 12-36, September.
  4. Borghans, Lex & ter Weel, Bas, 2008. "Understanding the Technology of Computer Technology Diffusion: Explaining Computer Adoption Patterns and Implications for the Wage Structure," IZA Discussion Papers 3792, Institute for the Study of Labor (IZA).
  5. Bas Straathof, 2006. "Schooling inequality and the rise of research," CPB Discussion Paper, CPB Netherlands Bureau for Economic Policy Analysis 74, CPB Netherlands Bureau for Economic Policy Analysis.
  6. Pyyhtiä, Ilmo, 2007. "Why is Europe lagging behind?," Research Discussion Papers, Bank of Finland 3/2007, Bank of Finland.
  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, University of Craiova, Faculty of Economics and Business Administration, vol. 3(40), pages 147-158.

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