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Skill-Biased Technical Change in U.S. Manufacturing: A General Index Approach

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Author Info
Baltagi, Badi H. () (Texas A&M University and IZA Bonn)
Rich, Daniel P. (Illinois State University)

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Abstract

This article applies recent advances in productivity and efficiency measurement to the evaluation of skillbiased technical change. Using the general index approach we are able to establish an explicit and unconstrained time path for nonneutral technical change between production and nonproduction labor in U.S. manufacturing industries over the 1959-1996 period. Our findings confirm the prevailing interpretation in the labor economics literature that substantial reductions in the relative share of production labor are attributable to a sustained period of nonneutral technical change. However, we find that skill-biased technical change effects are most evident prior to 1983. This predates the diffusion of personal computer technologies in the workplace and the dramatic wage structure changes associated with the 1980’s. In contrast to prevailing alternatives, the general index approach also permits us to explain observed shifts in relative labor demand as a combination of price-induced substitution, nonhomothetic output effects and skill-biased technical change responses to a range of proposed elements.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 841.

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Length: 37 pages
Date of creation: Aug 2003
Date of revision:
Handle: RePEc:iza:izadps:dp841

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Related research
Keywords: skill biased technical change; nonneutral technical change; labor demand; manufacturing; panel data; skill; wage inequality; general index of technical change;

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Find related papers by JEL classification:
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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References listed on IDEAS
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.:
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  6. Levy, Robert A & Jondrow, James M, 1986. "The Adjustment of Employment to Technical Change in the Steel and Auto Industries," Journal of Business, University of Chicago Press, vol. 59(3), pages 475-91, July. [Downloadable!] (restricted)
  7. Stephen Machin & John Van Reenen, 1998. "Technology And Changes In Skill Structure: Evidence From Seven Oecd Countries," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1215-1244, November. [Downloadable!] (restricted)
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  8. Wolff, Edward N., 2002. "The impact of IT investment on income and wealth inequality in the postwar US economy," Information Economics and Policy, Elsevier, vol. 14(2), pages 233-251, June. [Downloadable!] (restricted)
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  10. Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 367-97, May. [Downloadable!] (restricted)
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  12. Morrison, C. J. & Berndt, E. R., 1981. "Short-run labor productivity in a dynamic model," Journal of Econometrics, Elsevier, vol. 16(3), pages 339-365, August. [Downloadable!] (restricted)
  13. Julian R. Betts, 1997. "The Skill Bias Of Technological Change In Canadian Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 146-150, February. [Downloadable!] (restricted)
  14. Doms, Mark & Dunne, Timothy & Troske, Kenneth R, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 253-90, February.
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  17. Paul, Catherine J Morrison & Siegel, Donald S, 2001. " The Impacts of Technology, Trade and Outsourcing on Employment and Labor Composition," Scandinavian Journal of Economics, Blackwell Publishing, vol. 103(2), pages 241-64, June. [Downloadable!] (restricted)
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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. Shabbar Jaffry & Yaseen Ghulam & Joe Cox, 2006. "Impact of Regulatory Reforms on Labour Efficiency in the Indian and Pakistani Commercial Banks," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 1085-1102. [Downloadable!]
  2. Frank R. Lichtenberg, 2009. "The Quality of Medical Care, Behavioral Risk Factors, and Longevity Growth," NBER Working Papers 15068, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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