Skill-Biased Structural Change

Francisco J. Buera, Joseph P. Kaboski, Richard Rogerson, Juan I. Vizcaino

Research output: Contribution to journalArticlepeer-review

18 Scopus citations

Abstract

Using a broad panel of advanced economies, we document 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 labour, 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 labour. We develop a quantitative two-sector model of this process as a laboratory to assess the sources of the rise of the skill premium in the U.S. and a set of ten other advanced economies, over the period 1977 to 2005. For the U.S., we find that the sector-specific skill neutral component of technical change accounts for 18-24% of the overall increase of the skill premium due to technical change, and that the mechanism through which this component of technical change affects the skill premium is via skill-biased structural change.

Original languageEnglish (US)
Pages (from-to)592-625
Number of pages34
JournalReview of Economic Studies
Volume89
Issue number2
DOIs
StatePublished - Mar 1 2022

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Keywords

  • Skill premium
  • Structural change

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