Cyclical Skill-Biased Technological Change

Almut Balleer and Thijs van Rens

No 4258, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Over the past two decades, technological progress has been biased towards making skilled labor more productive. What does skill-biased technological change imply for business cycles? To answer this question, we construct a quarterly series for the skill premium from the CPS and use it to identify skill-biased technology shocks in a VAR with long run restrictions. We find that hours worked fall in response to skill-biased, but not in response to skill-neutral improvements in technology. Skill-biased technology shocks are associated with increases in the relative price of investment, indicating that capital and skill are substitutes in aggregate production.

Keywords: long-run restrictions; skill premium; VAR; skill-biased technology; capital-skill complementarity; business cycle (search for similar items in EconPapers)
JEL-codes: E24 E32 J24 J31 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2009-06
New Economics Papers: this item is included in nep-bec, nep-hrm, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published as 'Skill-Biased Technological Change and the Business Cycle' in: Review of Economics and Statistics, 2013, 95(4), 1222-1237

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Related works:
Working Paper: Cyclical Skill-Biased Technological Change (2007)
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