Skill Biased Technical Change: Wage Effects from a Panel of Occupational Task Measures

At the heart of the Skill Biased Technical Change literature is a discussion of the temporal impact of technological change on wages. The narrative describes technological change as allowing for the increased codification of routine tasks which enables capital to become more easily substituted for occupations with a high degree of engagement in these tasks. Existing empirical analyses have focused on the impact of SBTC by examining repeated cross-sections of individuals using constant measures of occupational task requirements. That approach is unable to explore how wages respond to the time variant components of occupational task requirements. This analysis expands the existing literature by examining wage effects using a panel of occupational task requirements constructed from 19 releases of the O*Net database. The panel of occupational task requirements is combined with a micropanel of workers and used to estimate the returns to differential task requirements both within and across occupations. These estimates confirm previous empirical findings that have relied on repeated cross sections but show that controlling for individual fixed effects reduces the magnitude of estimates across occupations. In addition, the analysis develops a structurally derived fixed effects model that helps to provide evidence that the same wage effects are absent for changes to tasks within occupations. The within occupation estimates do, however, illustrate how cross-occupational dynamics and employment transitions might be playing a role in the observed cross-sectional estimates.