Location: 368A Heady Hall

Description: Francisco Buera (Chicago Fed)

"Skill-Biased Structural Change"

Abstract: We document for a broad panel of advanced economies 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 labor, 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 labor. We
develop a two-sector model of this process and use it to assess the contribution
of this process of skill-biased structural change to the rise of the skill premium in
both the US, and a broad panel of advanced economies, over the period 1977 to
2005. We find that these compositional changes in demand account for between
25 and 30% of the overall increase of the skill premium due to technical change.

Contact Person: Juan Carlos Cordoba