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Implications of Skill-Biased Technological Change: International Evidence
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Implications of Skill-Biased Technological Change: International Evidence

Author

Listed:
  • Berman, Eli

    (Department of Economics, Boston University and NBER)

  • Bound, John

    (Department of Economics, University of Michigan and NBER)

  • Machin, Stephen

    (Department of Economics, University College London, and Centre for Economic Performance, London School of Economics)

Abstract

Demand for less skilled workers decreased dramatically in the US and in other developed countries over the past two decades. We argue that pervasive skill biased technological change rather than increased trade with the developing world is the principal culprit. The pervasiveness of this technological change is important for two reasons. First, it is an immediate and testable implication of technological change. Second, under standard assumptions, the more pervasive the skill biased technlogical change the greater the increase in the embodied supply of less skilled workers and the greater the depressing effect on their relative wages through world goods prices. In contrast, in the Heckscher-Ohlin model with small open economies, the skill-bias of local technological changes do not affect wages. Thus, pervasiveness deals with a major criticism of skill-biased technological as a cause. Testing the implications of pervasive, skill biased technological change we find strong supporting evidence. First, across the OECD, most industries have increased the proportion of skilled workers employed despite rising or stable relative wages. Second, increases in demand for skills were concentrated in the same manufacturing industries in different developed countries.

Suggested Citation

  • Berman, Eli & Bound, John & Machin, Stephen, 1997. "Implications of Skill-Biased Technological Change: International Evidence," Working Paper Series 486, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0486
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Wages; Skill; Technology; Trade;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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