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Implications of Skill-Biased Technological Change: International Evidence

Author

Listed:
  • Eli Berman
  • John Bound
  • Stephen Machin
Abstract
Demand for less skilled workers decreased dramatically in the US and in other developed countries over the past two decades. We argue that pervasive skill biased technological change rather than increased trade with the developing world is the principal culprit. The pervasiveness of this technological change is important for two reasons. First, it is an immediate and testable implication of technological change. Second, under standard assumptions, the more pervasive the skill biased technological change the greater the increase in the embodied supply of less skilled workers and the greater the depressing effect on their relative wages through world goods prices. In contrast, in the Heckscher-Ohlin model with small open economies, the skill-bias of the local technological changes do not affect wages. Thus, pervasiveness deals with a major criticism of skill-biased technological as a cause. Testing the implications of pervasive, skill biased technological change we find strong supporting evidence. First, across OECD, most industries have increased the proportion of skilled workers employed despite rising or stable relative wages. Second, increases in demand for skills were concentrated in the same manufacturing industries in different developed countries.

Suggested Citation

  • Eli Berman & John Bound & Stephen Machin, 1997. "Implications of Skill-Biased Technological Change: International Evidence," Boston University - Institute for Economic Development 78, Boston University, Institute for Economic Development.
    • Handle: RePEc:fth:bosecd:78
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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