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Technology and Changes in Skill Structure: Evidence from an International Panel of Industries


  • Machin, Steve
  • Van Reenen, John


This paper examines the evidence that rapid upgrading of the skill structure in recent years was driven by technological change. Four countries are examined who have had different wage inequality and unemployment trends – Denmark, Sweden, the United Kingdom and the United States. The analysis of changes in wage bill shares and employment shares of more skilled workers leads us to the following conclusions: (i) within-industry changes are the driving force of aggregate shifts across all four countries; (ii) there is evidence of skill-biased technical change and capital-skill complementarity in all four countries; (iii) the results are robust to using education instead of occupation as a measure of skill, and computerization instead of R&D as a measure of technology; (iv) in the Anglo-Saxon countries a maximum of one-third of the aggregate change in the skill structure can be accounted for purely by technological factors; (v) the decline of collective bargaining, rather than trade, in the United Kingdom and the United States is an important factor in explaining the changes.

Suggested Citation

  • Machin, Steve & Van Reenen, John, 1996. "Technology and Changes in Skill Structure: Evidence from an International Panel of Industries," CEPR Discussion Papers 1434, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1434

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    References listed on IDEAS

    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
    2. Zvi Griliches, 1998. "Patent Statistics as Economic Indicators: A Survey," NBER Chapters,in: R&D and Productivity: The Econometric Evidence, pages 287-343 National Bureau of Economic Research, Inc.
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    4. Zoltan Acs & David Audretsch, 1990. "Innovation and Small Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011131, January.
    5. Malerba, Franco & Orsenigo, Luigi, 1995. "Schumpeterian Patterns of Innovation," Cambridge Journal of Economics, Oxford University Press, vol. 19(1), pages 47-65, February.
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    8. Pavitt, Keith & Robson, Michael & Townsend, Joe, 1987. "The Size Distribution of Innovating Firms in the UK: 1945-1983," Journal of Industrial Economics, Wiley Blackwell, vol. 35(3), pages 297-316, March.
    9. Scott,John T., 2005. "Purposive Diversification and Economic Performance," Cambridge Books, Cambridge University Press, number 9780521022583, March.
    10. repec:fth:harver:1473 is not listed on IDEAS
    11. Elena Cefis, 1996. "Is there any persistence in innovative activities?," Department of Economics Working Papers 9606, Department of Economics, University of Trento, Italia.
    12. Jaggia, Sanjiv, 1991. "Tests of moment restrictions in parametric duration models," Economics Letters, Elsevier, vol. 37(1), pages 35-38, September.
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    14. Richard R. Nelson, 1959. "The Simple Economics of Basic Scientific Research," Journal of Political Economy, University of Chicago Press, vol. 67, pages 297-297.
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    More about this item


    Employment; R&D; Skills; Technology;

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes


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