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Skill-Biased Technical Change: Theoretical Concepts, Empirical Problems and a Survey of the Evidence

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Listed:
  • Sanders, Mark
  • Weel, Bas ter

    (MERIT)

Abstract

The structure of wages and employment has shifted against the low-skilled in many OECD countries over the last decade. Many authors have attributed this shift to the impact of new technologies, and or technical change in general. This paper investigates and structures the growing body of literature on skill-biased technical change (SBTC) by first presenting a model in which SBTC is formalised and decomposed into factor and sector biases of technical change. We show that as we go down to the job level the scope for pure within unit-skill bias decreases and between-unit effects explain the within-unit effects detected at higher aggregation levels. Second, we address some potential sources of skill bias, which are learning, R&D, human capital formation, organisational change and the introduction of new general purpose technologies. Finally we present some conceptual and practical problems we encounter when studying SBTC empirically. We conclude with a survey of selected empirical literature on the subject and discuss the results in light of the empirical and theoretical problems pointed out above.

Suggested Citation

  • Sanders, Mark & Weel, Bas ter, 2000. "Skill-Biased Technical Change: Theoretical Concepts, Empirical Problems and a Survey of the Evidence," Research Memorandum 012, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:umamer:2000012
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    File URL: https://www.merit.unu.edu/publications/rmpdf/2000/rm2000-012.pdf
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    References listed on IDEAS

    as
    1. Michael Grossman, 1972. "The Demand for Health: A Theoretical and Empirical Investigation," NBER Books, National Bureau of Economic Research, Inc, number gros72-1.
    2. Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers 568, China Economics and Management Academy, Central University of Finance and Economics.
    3. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, pages 121-144.
    4. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    5. Ehrlich, Isaac & Chuma, Hiroyuki, 1990. "A Model of the Demand for Longevity and the Value of Life Extension," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 761-782, August.
    6. Forster, Bruce A, 1989. "Optimal Health Investment Strategies," Bulletin of Economic Research, Wiley Blackwell, vol. 41(1), pages 45-57, January.
    7. Johansson, Per-Olov & Lofgren, Karl-Gustaf, 1995. "Wealth from optimal health," Journal of Health Economics, Elsevier, vol. 14(1), pages 65-79, May.
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    9. Muurinen, Jaana-Marja, 1982. "Demand for health: A generalised Grossman model," Journal of Health Economics, Elsevier, vol. 1(1), pages 5-28, May.
    10. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    More about this item

    Keywords

    labour economics ;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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