Teaching and Research Fields
Primary: Labor, International Trade
Secondary: Development Economics
Job Market Paper
“Is Technological
Change Biased Towards the Unskilled in Services? An Empirical Investigation”. Paper. Non-technical
summary.
Abstract
The leading explanation for the
increase in the U.S.
college premium over the last 40 years is aggregate skill biased technological
change (SBTC). This explanation overlooks shifts in the economy's sectoral
composition and excludes the possibility of different directions of
technological biases in different sectors. I estimate a two-sector general
equilibrium model which fits the U.S. aggregate and sectoral trends
in relative wages, prices and employment during 1963-2005. Technological change
is inferred by directly exploiting general equilibrium restrictions and
optimality conditions. The estimates reveal that in the growing skill intensive
services sector technological progress has been unskilled biased, i.e. average
productivity of less skilled workers increased faster than it did for skilled
workers. In the unskilled intensive goods sector in contrast, the opposite bias
is estimated. Convolution of these two forces leads to inferring SBTC at the
aggregate level, in spite of the diverging trends in goods and services. Faster
productivity growth of unskilled versus skilled workers in services is
consistent with a shift in the mix of occupations: unskilled workers in
services have continuously re-allocated into more computer complementary
occupations to a greater extent than skilled workers. In contrast, the
occupational mix in the goods sector moderately shifted in the opposite
direction, which is consistent with faster productivity growth for skilled
workers. Taking explicitly into account the sectoral composition of the economy
can change our view on the direction of technological change over the last 40
years.
