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Shifts and Twists in the Relative Productivity of Skilled Labor

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Author Info
Arnaud Dupuy () (ROA, Maastricht University and IZA)
Philip S. Marey () (ROA, Maastricht University)

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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’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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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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Handle: RePEc:iza:izadps:dp2694

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

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Find related papers by JEL classification:
J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. 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!]
  2. 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!]
  3. Pyyhtiä, Ilmo, 2007. "Why is Europe lagging behind?," Research Discussion Papers 3/2007, Bank of Finland. [Downloadable!]
  4. 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!]
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  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. 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!]
  7. Bas Straathof, 2006. "Schooling inequality and the rise of research," CPB Discussion Papers 74, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
    Other versions:
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