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

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  • Baltagi, Badi H.

    ()
    (Syracuse University)

  • Rich, Daniel P.

    ()
    (Illinois State University)

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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Bibliographic 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:
Publication status: published in: Journal of Econometrics, 2005, 126 (2), 549-570
Handle: RePEc:iza:izadps:dp841

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

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  1. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February.
  2. 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.
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Cited by:
  1. 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.
  2. Ljubica Nedelkoska & Simon Wiederhold, 2010. "Technology, outsourcing, and the demand for heterogeneous labor: Exploring the industry dimension," Jena Economic Research Papers 2010-052, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  3. Sauer, Johannes & Graversen, Jesper T. & Park, Timothy A., 2006. "Breathtaking or Stagnating? - Productivity, Technical Change and Structural Dynamics in Danish Organic Farming," 2006 Annual meeting, July 23-26, Long Beach, CA 21481, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Cörvers Frank & Meriküll Jaanika, 2008. "Occupational Structures across 25 EU Countries: The Importance of Industry Structure and Technology in Old and New EU Countries," ROA Research Memorandum 002, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  5. Sauer, Johannes & Park, Timothy A. & Graversen, Jesper T., 2007. "Organic Farming In Denmark-Productivity, Technical Change And Market Exit," 47th Annual Conference, Weihenstephan, Germany, September 26-28, 2007 7618, German Association of Agricultural Economists (GEWISOLA).
  6. Ariel Casarin, 2014. "Productivity throughout regulatory cycles in gas utilities," Journal of Regulatory Economics, Springer, vol. 45(2), pages 115-137, April.
  7. Baltagi B-H. & Pirotte, 2010. "Seemingly Unrelated Regressions With Spatial Error Components," Working Papers ERMES 0902, ERMES, University Paris 2.
  8. 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.

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