Kiel Working Papers, Kiel Institute for World Economics
No 1775:
Skill-Biased Technological Change and the Business Cycle
Thijs van Rens Almut Balleer
Abstract: Over the past two decades, technological progress in the
United States has been biased towards skilled labor. What does this imply
for business cycles? We construct a quarterly skill premium from the CPS
and use it to identify skill-biased technology shocks in a VAR with
long-run restrictions. Hours fall in response to skill-biased technology
shocks, indicating that at least part of the technology-induced fall in
total hours is due to a compositional shift in labor demand.
Investment-specific technology shocks reduce the skill premium, indicating
that capital and skill are not complementary in aggregate production
Keywords: skill-biased technology, skill premium, VAR, long-run restrictions, capital-skill, complementarity, business cycle; (follow links to similar papers)
JEL-Codes: E24,; E32,; J24,; J31; (follow links to similar papers)
48 pages, June 2012
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