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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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    References listed on IDEAS

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