Skill-Biased Structural Change

Buera, Francisco J.; Kaboski, Joseph P.; Rogerson, Richard; Vizcaino, Juan I.

Abstract

Using a broad panel of advanced economies, we document that increases in GDP per capita are associated with a systematic shift in the composition of value added to sectors that are intensive in high-skill labour, a process we label as skill-biased structural change. It follows that further development in these economies leads to an increase in the relative demand for skilled labour. We develop a quantitative two-sector model of this process as a laboratory to assess the sources of the rise of the skill premium in the U.S. and a set of ten other advanced economies, over the period 1977 to 2005. For the U.S., we find that the sector-specific skill neutral component of technical change accounts for 18-24% of the overall increase of the skill premium due to technical change, and that the mechanism through which this component of technical change affects the skill premium is via skill-biased structural change.

• Journal Article Type: Article
• Acceptance Date: Nov 19, 2020
• Online Publication Date: Jul 30, 2021
• Publication Date: 2022-03
• Deposit Date: Nov 17, 2020
• Journal: Review of Economic Studies
• Print ISSN: 0034-6527
• Electronic ISSN: 1467-937X
• Publisher: Oxford University Press
• Peer Reviewed: Peer Reviewed
• Volume: 89
• Issue: 2
• Pages: 592–625
• DOI: https://doi.org/10.1093/restud/rdab035
• Public URL: https://nottingham-repository.worktribe.com/output/5050339
• Publisher URL: https://academic.oup.com/restud/article-abstract/89/2/592/6332019?redirectedFrom=fulltext
• Additional Information: This is a pre-copyedited, author-produced version of an article accepted for publication in "Review of Economic Studies" following peer review. The version of record Francisco J Buera, Joseph P Kaboski, Richard Rogerson, Juan I Vizcaino, Skill-Biased Structural Change, The Review of Economic Studies, Volume 89, Issue 2, March 2022, Pages 592–625, is available online at: https://doi.org/10.1093/restud/rdab035