Skill-Biased Technological Change and the Business Cycle

Almut Balleer and Thijs van Rens

The Review of Economics and Statistics, 2013, vol. 95, issue 4, 1222-1237

Abstract: Over the past two decades, technological progress in the United States has been biased toward skilled labor. What does this imply for business cycles? We construct a quarterly skill premium from the CPS and use it to identify skill-biased technology shocks in a VAR with long-run zero and sign restrictions. Hours fall in response to skill-biased technology shocks, indicating that part of the technology-induced fall in hours is due to a compositional shift in labor demand. Investment-specific technology shocks reduce the skill premium, indicating that capital and skill are not complementary in aggregate production. © 2013 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Keywords: skill-biased technology; skill premium; VAR; long-run restrictions; capital-skill complementarity; business cycle (search for similar items in EconPapers)
JEL-codes: E24 E32 J24 J31 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (29)

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Working Paper: Skill-Biased Technological Change and the Business Cycle (2015)
Working Paper: Skill-Biased Technological Change and the Business Cycle (2011)
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