Skill-Biased Structural Change and the Skill Premium

Richard Rogerson, Joseph Kaboski and Francisco Buera

No 895, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: We document for a broad panel of advanced economies that increases in GDP per capita are associated with a shift in the composition of value added to sectors that are intensive in high-skill labor. It follows that further development in these economies leads to an increase in the relative demand for skilled labor. We develop a two-sector model of this process and use it to assess the contribution of this process of skill-biased structural change to the rise of the skill premium in the US over the period 1977 to 2005. We find that these compositional demands account for roughly 30% of the overall increase of the skill premium due to technical change.

Date: 2015
New Economics Papers: this item is included in nep-dge and nep-tid
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