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Skill-biased technical change in US manufacturing: a general index approach

  • Baltagi, Badi H.
  • Rich, Daniel P.

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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Article provided by Elsevier in its journal Journal of Econometrics.

Volume (Year): 126 (2005)
Issue (Month): 2 (June)
Pages: 549-570

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Handle: RePEc:eee:econom:v:126:y:2005:i:2:p:549-570
Contact details of provider: Web page: http://www.elsevier.com/locate/jeconom

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  1. Eli Berman & John Bound & Stephen Machin, 1997. "Implications of Skill-Biased Technological Change: International Evidence," Boston University - Institute for Economic Development 78, Boston University, Institute for Economic Development.
  2. Nicole M. Fortin & Thomas Lemieux, 1997. "Institutional Changes and Rising Wage Inequality: Is There a Linkage?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 75-96, Spring.
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  16. Binswanger, Hans P., 1973. "The Measurement Of Technical Change Biases With Many Factors Of Production," Staff Papers 14205, University of Minnesota, Department of Applied Economics.
  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, Wiley Blackwell, vol. 103(2), pages 241-64, June.
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  19. 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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