Skill-Biased Technological Change and the Business Cycle
Over the past two decades, technological progress in the United States has been biased towards skilled labor. What does this imply for business cycles? This paper constructs a quarterly skill premium from the CPS and uses it to identify skill-biased technology shocks in a VAR with long-run restrictions. Hours fall in response to skill-biased technology shocks, indicating that at least part of the technology-induced fall in total hours is due to a compositional shift in labor demand. Investment-specific technology shocks reduce the skill premium, indicating that capital and skill are not complementary in aggregate production.
© 2012 Kiel Institute for the World Economy
Almut Balleer, Thijs van Rens
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