New Goods and Rising Skill Premium: An Empirical Investigation
Chong Xiang ()
No 479, Working Papers from Research Seminar in International Economics, University of Michigan
This paper identifies and measures new goods in the U.S. manufacturing sector in the late 1970s and 1980s, and finds that: (i) The average skilled-labor intensity of new goods exceeds that of old goods by over 40%; (ii) even within 4-digit industries, new goods are slightly more skilled-labor intensive than old goods (by about 4%); (iii) new goods can account for about 30% of the increase in the relative demand for skilled labor. Therefore, new goods help explain the rising skill premium in the U.S. Furthermore, new goods provide a direct measure of technological changes so that this paper provides new evidence that technology has shifted demand in favor of skilled labor and finds that a sizeable "between" component of the rise in the relative demand for skilled labor is due to technology.
Keywords: new goods; rising skill premium; technology; average skilled-labor intensity; relative demand for skilled labor (search for similar items in EconPapers)
JEL-codes: J31 O30 (search for similar items in EconPapers)
Pages: 52 Pages
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Persistent link: https://EconPapers.repec.org/RePEc:mie:wpaper:479
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