Working Paper: CEPR ID: DP17421
Authors: Attila Lindner; Balazs Murakozy; Balazs Reizer; Ragnhild Schreiner
Abstract: We quantify the contribution of firm-level technological change to skill demand and aggregate inequality in the presence of imperfect competition in the labor market. We show that skill-biased technological change increases both the firm-level skill ratio and the skill premium, while other shocks (e.g. firm-specific output demand shocks) cannot explain the increase in both outcomes. We exploit administrative data and a large survey measuring a broad class of firm-level technological changes from Hungary and Norway. We estimate that the aggregate college premium increases by 6.1% in Norway and by 13.8% in Hungary as a result of the skill bias in technological change.
Keywords: skill-biased technological change; innovation; skill premiums; imperfect competition
JEL Codes: J31; J24; O30; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| firm-level technological change (O33) | skill premium (J24) |
| firm-level technological change (O33) | skill ratio (J24) |
| innovation (O35) | wage premium (J31) |
| higher intensity innovation (O36) | larger increase in skill premium (J24) |
| skill-biased technological change (J24) | skill premium (J24) |
| skill-biased technological change (J24) | skill ratio (J24) |