The role of product diversification in skill-biased technological change

Nam, Choong Hyun (2014): The role of product diversification in skill-biased technological change.

Abstract

Since the 1980s, the labour demand has shifted toward more educated workers in the US. The most common explanation is that the productivity of skilled workers has risen relative to the unskilled, but it is not easy to explain why the aggregate labour productivity was stagnant during the 1980s. Alternatively, I have constructed a theoretical model which assumes that the demand for white-collar workers increases not because their productivity grows faster, but because increasing product variety requires white-collar workers as fixed input. Hence, the transition from Ford-style mass production towards more diversified one has shifted labour demand toward white-collar workers.

• Item Type: MPRA Paper
• Language: English
• Keywords: Skill Demand; product innovation; inequality; productivity
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E23 - Production; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity

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