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Skill-Biased Structural Change and the Skill Premium

Author

Listed:
  • Richard Rogerson

    (Princeton University)

  • Joseph Kaboski

    (University of Notre Dame)

  • Francisco Buera

    (Federal Reserve Bank of Chicago)

Abstract

We document for a broad panel of advanced economies that increases in GDP per capita are associated with a shift in the composition of value added to sectors that are intensive in high-skill labor. It follows that further development in these economies leads to an increase in the relative demand for skilled labor. We develop a two-sector model of this process and use it to assess the contribution of this process of skill-biased structural change to the rise of the skill premium in the US over the period 1977 to 2005. We find that these compositional demands account for roughly 30% of the overall increase of the skill premium due to technical change.

Suggested Citation

  • Richard Rogerson & Joseph Kaboski & Francisco Buera, 2015. "Skill-Biased Structural Change and the Skill Premium," 2015 Meeting Papers 895, Society for Economic Dynamics.
  • Handle: RePEc:red:sed015:895
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    File URL: https://economicdynamics.org/meetpapers/2015/paper_895.pdf
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    References listed on IDEAS

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    1. Tomasz Swiecki, 2017. "Determinants of Structural Change," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 24, pages 95-131, March.
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    Cited by:

    1. Echeverri-Carroll, Elsie L. & Oden, Michael D. & Gibson, David V. & Johnston, Evan A., 2018. "Unintended consequences on gender diversity of high-tech growth and labor market polarization," Research Policy, Elsevier, vol. 47(1), pages 209-217.
    2. Paul, Saumik, 2019. "A Decline in Labor's Share with Capital Accumulation and Complementary Factor Inputs: An Application of the Morishima Elasticity of Substitution," IZA Discussion Papers 12219, Institute of Labor Economics (IZA).
    3. Bustos, Paula & Castro Vincenzi, Juan Manuel & Monras, Joan & Ponticelli, Jacopo, 2018. "Structural Transformation, Industrial Specialization, and Endogenous Growth," CEPR Discussion Papers 13379, C.E.P.R. Discussion Papers.
    4. Kopytov, Alexandr & Roussanov, Nikolai & Taschereau-Dumouchel, Mathieu, 2018. "Short-run pain, long-run gain? Recessions and technological transformation," Journal of Monetary Economics, Elsevier, vol. 97(C), pages 29-44.
    5. Pedro Cavalcanti Ferreira & Alexander Monge-Naranjo & Luciene Torres de Mello Pereira, 2016. "Of Cities and Slums," Working Papers 2016-22, Federal Reserve Bank of St. Louis.
    6. Paula Bustos & Juan Manuel Castro-Vincenzi & Joan Monras & Jacopo Ponticelli, 2019. "Industrialization without Innovation," NBER Working Papers 25871, National Bureau of Economic Research, Inc.
    7. Paul, Saumik, 2018. "Capital Skill Substitutability and the Labor Income Share: Identification Using the Morishima Elasticity of Substitution," ADBI Working Papers 839, Asian Development Bank Institute.
    8. Daniela Iorio & Raül Santaeulàlia-Llopis, 2011. "Education, HIV Status, and Risky Sexual Behavior: How Much Does the Stage of the HIV Epidemic Matter?," Working Papers 624, Barcelona Graduate School of Economics.
    9. Jung, Yeonha, 2020. "The long reach of cotton in the US South: Tenant farming, mechanization, and low-skill manufacturing," Journal of Development Economics, Elsevier, vol. 143(C).
    10. Bolhuis, Marijn, 2019. "Catch-Up Growth and Inter-Industry Productivity Spillovers," MPRA Paper 94730, University Library of Munich, Germany.
    11. Andrés Álvarez & Camilo Gómez & Hernando Zuleta, 2019. "Bequests, Imperfections in Factor Markets, and Long-Run Inequality: A Theoretical Assessment of Piketty," Documentos CEDE 017674, Universidad de los Andes - CEDE.
    12. Kiminori Matsuyama, 2019. "Engel's Law in the Global Economy: Demand‐Induced Patterns of Structural Change, Innovation, and Trade," Econometrica, Econometric Society, vol. 87(2), pages 497-528, March.
    13. Wolfgang Britz & Roberto Roson, 2018. "Exploring Long Run Structural Change with a Dynamic General Equilibrium Model," Working Papers 2018: 12, Department of Economics, University of Venice "Ca' Foscari".
    14. Yoko Oishi & Saumik Paul, 2018. "Sectoral Labor Income Share Dynamics: Cross – Country Evidence from a Novel Dataset," Working Papers id:12930, eSocialSciences.
    15. Gallipoli, Giovanni & Makridis, Christos A., 2018. "Structural transformation and the rise of information technology," Journal of Monetary Economics, Elsevier, vol. 97(C), pages 91-110.
    16. Jung, Sungmoon & Lee, Jeong-Dong & Hwang, Won-Sik & Yeo, Yeongjun, 2017. "Growth versus equity: A CGE analysis for effects of factor-biased technical progress on economic growth and employment," Economic Modelling, Elsevier, vol. 60(C), pages 424-438.
    17. Robert Plant & Manuel S. Santos & Tarek Sayed, 2017. "Computerization, Composition of Employment, and Structure of Wages," Working Papers 2017-09, University of Miami, Department of Economics.
    18. Lee, Eunhee, 2020. "Trade, inequality, and the endogenous sorting ofheterogeneous workers," Journal of International Economics, Elsevier, vol. 125(C).
    19. Roberto Roson, 2017. "Understanding the Global Dynamics of Sectoral Labor Productivity," Working Papers 2017:15, Department of Economics, University of Venice "Ca' Foscari".

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