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Shifts and Twists in the Relative Productivity of Skilled Labor: Reconciling Accelerated SBTC with the Productivity Slowdown

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  • Philip Marey
  • Arnaud Dupuy

Abstract

Skill-biased technical change is usually interpreted in terms of the efficiency parameters of skilled and unskilled labor. This implies that the relative productivity of skilled workers changes proportionally in all tasks. In contrast, we argue that technical changes also affect the curvature of the distribution of relative productivity. Building on Rosen's (1978) tasks assignment model, this implies that not only the efficiency parameters of skilled and unskilled workers change, but also the elasticity of substitution between skill-types of labor. Using data for the United States between 1963 and 2002, we find significant empirical support for a decrease in the elasticity of substitution at the end of the 70s followed by an increase at the end of the 80s. This pattern of the elasticity of substitution has contributed to the slowdown in labor productivity in the late 70s through the 80s and to a speedup in the 90s

Suggested Citation

  • Philip Marey & Arnaud Dupuy, 2004. "Shifts and Twists in the Relative Productivity of Skilled Labor: Reconciling Accelerated SBTC with the Productivity Slowdown," Econometric Society 2004 North American Summer Meetings 118, Econometric Society.
  • Handle: RePEc:ecm:nasm04:118
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    References listed on IDEAS

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    Cited by:

    1. Pyyhtiä, Ilmo, 2007. "Why is Europe lagging behind?," Research Discussion Papers 3/2007, Bank of Finland.
    2. Bas Straathof, 2005. "Schooling inequality and the rise of research," DEGIT Conference Papers c010_012, DEGIT, Dynamics, Economic Growth, and International Trade.
    3. Dupuy, Arnaud & de Grip, Andries, 2006. "Elasticity of substitution and productivity, capital and skill intensity differences across firms," Economics Letters, Elsevier, vol. 90(3), pages 340-347, March.

    More about this item

    Keywords

    Assignment; SBTC; output growth; cointegration and regime shifts;

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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