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Analyzing Skilled and Unskilled Labor Efficiencies in US

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In this paper, using a production framework in which skilled and unskilled labor are imperfect substitutes, we analyze the time paths of the efficiencies of skilled and unskilled labor and their implications for wage inequality and economic growth. We find no evidence that supports the common view that there has been an acceleration in skilled biased technical change. Indeed, after 1973 the efficiency of skilled labor grew more slowly than it had from 1961 to 1973. More interestingly, we find that after 1973 there has been a substantial decline in the efficiency of unskilled labor, implying that the decline in unskilled labor efficiency has significantly contributed to the widening in the U.S. wage structure. In a standard growth accounting framework, these findings further imply that skilled labor efficiency growth accounts for 35 to 67 percent of output growth, while changes in unskilled labor efficiency account for -31 to 2 percent of output growth, depending on exact values of the parameters of the model and the definition of skilled labor.

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  • Bulent Unel, 2007. "Analyzing Skilled and Unskilled Labor Efficiencies in US," Departmental Working Papers 2007-11, Department of Economics, Louisiana State University.
    • Handle: RePEc:lsu:lsuwpp:2007-11
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    Cited by:

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    2. Ricardo Argüello & Daniel Valderrama-Gonzalez, 2015. "Sectoral and poverty impacts of agricultural policy adjustments in Colombia," Agricultural Economics, International Association of Agricultural Economists, vol. 46(2), pages 259-280, March.
    3. Guèye, Adama, 2014. "Normes SPS et compétitivité-qualité de la filière fruits et légumes frais au Sénégal," Conference papers 332558, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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