Skill-biased technical change in US manufacturing: A general index approach

Badi H. Baltagi, Daniel P. Rich

Research output: Contribution to journalArticle

13 Scopus citations

Abstract

This article applies recent advances in productivity and efficiency measurement to the evaluation of skill-biased technical change. Using the general index approach we are able to establish an explicit and unconstrained time path for nonneutral technical change between production and nonproduction labor in US manufacturing industries over the 1959-1996 period. Our findings confirm the prevailing interpretation in the labor economics literature that substantial reductions in the relative share of production labor are attributable to a sustained period of nonneutral technical change. However, we find that skill-biased technical change effects are most evident prior to 1983. This predates the diffusion of personal computer technologies in the workplace and the dramatic wage structure changes associated with the 1980s. In contrast to prevailing alternatives, the general index approach also permits us to explain observed shifts in relative labor demand as a combination of price-induced substitution, nonhomothetic output effects and skill-biased technical change responses to a range of proposed elements.

Original languageEnglish (US)
Pages (from-to)549-570
Number of pages22
JournalJournal of Econometrics
Volume126
Issue number2
DOIs
StatePublished - Jun 1 2005
Externally publishedYes

Keywords

  • General index
  • Panel data
  • Productivity
  • Technical change

ASJC Scopus subject areas

  • Economics and Econometrics

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