Skill-Biased Structural Change

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

doi:10.1093/restud/rdab035

Skill-Biased Structural Change

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

Research output: Contribution to journal › Article › peer-review

41 Scopus citations

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.

Original language	English
Pages (from-to)	592-625
Number of pages	34
Journal	Review of Economic Studies
Volume	89
Issue number	2
DOIs	https://doi.org/10.1093/restud/rdab035
State	Published - Mar 1 2022

Keywords

Skill premium
Structural change

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10.1093/restud/rdab035

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title = "Skill-Biased Structural Change",

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.",

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AU - Buera, Francisco J.

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AB - 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.

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Skill-Biased Structural Change

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