Skills Substitutability and Technological Progress: U.S. States 1950-1990

41 Pages Posted: 13 Sep 2003

See all articles by Antonio Ciccone

Antonio Ciccone

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Giovanni Peri

University of California, Davis - Department of Economics

Date Written: September 2003

Abstract

In this article we estimate the long-run aggregate elasticity of substitution between skilled and unskilled workers. This is an important parameter as it allows us to compute the skill biased technological progress (SBTP) from the evolution of relative wages. However, it is hard to estimate because skill supply is endogenous. We tackle the task by using instruments proposed by the labor literature as sources of exogenous variation of schooling achievements across U.S. States. They are the state laws on Compulsory Schooling Attendance and on Child Labor. We then calculate SBTP and, using growth accounting, we calculate Hicks neutral technological progress (HNTP) for U.S. states in each decade between 1950 and 1990.

Keywords: elasticity of substitution, skill biased technology, skilled and unskilled workers, U.S. states

JEL Classification: J3, O3, R1

Suggested Citation

Ciccone, Antonio and Peri, Giovanni, Skills Substitutability and Technological Progress: U.S. States 1950-1990 (September 2003). CESifo Working Paper Series No. 1024. Available at SSRN: https://ssrn.com/abstract=443940

Antonio Ciccone

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
+34 93 542 1669 (Phone)
+34 93 542 1746 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Giovanni Peri (Contact Author)

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
530-752-3033 (Phone)
530-752-9382 (Fax)

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