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Overhead Labour and Skill-Biased Technological Change: The Role of Product Diversification

Choong Hyun Nam ()
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Choong Hyun Nam: Economic Research Institute, Bank of Korea

No 2019-15, Working Papers from Economic Research Institute, Bank of Korea

Abstract: This paper tries to explain why a certain type of technology is skill-biased. In contrast with existing literature, this paper regards skilled workers as overhead labour, and presents a model wherein skilled workers constitute a fixed input, required to produce a new product. The demand for skill increases with product variety, and information technology is skill-biased because it raises product variety by lowering the fixed cost of product creation. However, skill-biased change does not necessarily raise measured productivity because product diversification reallocates resources into fixed inputs, which is consistent with the historical fact that skill-biased change did not always accompany productivity growth.

Keywords: Skill demand; Product innovation; Inequality; Productivity (search for similar items in EconPapers)
JEL-codes: E24 J31 L1 O3 O4 (search for similar items in EconPapers)
Pages: 80 pages
Date: 2019-04-08
New Economics Papers: this item is included in nep-eff, nep-gro, nep-lma, nep-mac and nep-tid
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