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Many Sectors Meet More Skills: Intersectoral Linkages and the Skill Bias of Technology

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  • Nico Voigtlaender

    (UCLA)

Abstract

While intermediate inputs account for more than half of a final product's value, intersectoral linkages have been ignored as a source of skill bias. Previous empirical studies have investigated skill demand at the worker-, firm-, and sector-level. This paper integrates intersectoral linkages and complementarities into the standard skill-biased technical change (SBTC) framework. In a simple multi-sector model, we allow skill-biased intermediate technology to raise skill bias in final production. The model predicts a multiplier effect that augments small sector-level skill bias into a large aggregate impact on skill demand. We construct a proxy for the skill bias embedded in each sector's intermediate products: input skill intensity. This variable correlates strongly with the skill share employed in final production -- a novel stylized fact that points towards an intersectoral technology-skill complementarity. Together with input-output linkages, the observed complementarity reinforces skill demand along the production chain. The effect is large, accounting for more than one third of the observed skill upgrading in U.S. manufacturing.

Suggested Citation

  • Nico Voigtlaender, 2009. "Many Sectors Meet More Skills: Intersectoral Linkages and the Skill Bias of Technology," 2009 Meeting Papers 1136, Society for Economic Dynamics.
  • Handle: RePEc:red:sed009:1136
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