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Working paper

Factor-Biased Technological Change and the Skill Premium: A Cross-Country Evidence

EUSP Department of Economics Working Paper Series. Ec. European University at St. Petersburg, Department of Economics, 2016. No. 05/16.
This paper provides a cross-country analysis of trends in the skill premium and in the relative supply of high-skilled labor based on the data for 21 OECD countries over the last decades of the twentieth century. We document that, in contrast to the steadily increasing trends in the relative supply of high-skilled labor, the dynamics of the skill premium varies substantially across the countries. One of the main empirical findings of the paper is the evidence that both US and European countries experienced skill-biased rather than unskill-biased technological change. We also develop a new modification of the Acemoglu’s directed technological change model and show that such modification is helpful in explaining the skill premium patterns.