Implications of Skill-Biased Technological Change: International Evidence

42 Pages Posted: 7 Sep 2000

See all articles by Eli Berman

Eli Berman

University of California, San Diego (UCSD) - Department of Economics; National Bureau of Economic Research (NBER)

John Bound

University of Michigan; National Bureau of Economic Research (NBER)

Stephen J. Machin

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); London School of Economics & Political Science (LSE) - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: September 1997

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 technological 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 does not affect wages. Thus, pervasiveness deals with a major criticism of skill-biased technological change 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 and Bound, John and Machin, Stephen J., Implications of Skill-Biased Technological Change: International Evidence (September 1997). NBER Working Paper No. w6166, Available at SSRN: https://ssrn.com/abstract=225926

Eli Berman (Contact Author)

University of California, San Diego (UCSD) - Department of Economics ( email )

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John Bound

University of Michigan ( email )

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Stephen J. Machin

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

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United Kingdom

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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