New Goods and Rising Skill Premium: An Empirical Investigation

Chong Xiang

No 479, Working Papers from Research Seminar in International Economics, University of Michigan

Abstract: 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
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:mie:wpaper:479

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