The Supply of Skilled Labor and Skill-Biased Technological Progress
Board of Governors of the Federal Reserve System Finance and Econ. Disc. Series 97-45
18 Pages Posted: 16 Dec 1997
Date Written: August 15, 1997
Rising inequality in the relative wages of skilled and unskilled labor is often attributed to skill-biased technological progress. This paper presents a model in which the adoption of skill-biased or "unskilled-biased" technologies is endogenous. Conventional wisdom states that an increase in the supply of skilled labor lowers the relative wage of skilled to unskilled labor. In this paper, an increase in the supply of skilled labor leads to temporary stagnation in the wages of unskilled workers and an expanding gap between the wages of skilled and unskilled workers through an acceleration of skill-biased technological change.
JEL Classification: O30, J31, O40
Suggested Citation: Suggested Citation