Skill-Biased Technological Change

A Skill-Biased Technological Change is a technological change that disproportionately benefits skilled labor by increasing its relative productivity and relative demand, compared to unskilled labor.

• Context:
  • It can (typically) lead to an increased demand for high-skilled workers and a relative decrease in demand for low-skilled workers.
  • It can (often) result in widening wage gaps between skilled and unskilled workers.
  • It can range from (typically) being Technological Change Biased to High-Skilled Workers (high-skill worker) to being a Technological Change Biased to Low-Skilled Worker.
  • It can influence the nature of workplace organization, with a trend towards more sophisticated, technology-driven work environments.
  • It can be a driving factor in reshaping education and training systems to meet the demands of a technologically advanced labor market.
  • It can stimulate debates on income distribution, social inequality, and economic policy.
  • It can be influenced by innovators' economic incentives, shaped by relative prices, market size, and institutions.
  • ...
• Example(s):
  • The adoption of advanced manufacturing technologies, such as robotics and automation, in industries like automotive manufacturing has increased the demand for engineers and technicians while reducing the need for assembly line workers.
  • The rise of information technology in the workplace leads to greater demand for IT professionals and a decrease in jobs that require less technical skills, such as certain types of administrative work.
  • The growth of the software industry, where there is a high demand for skilled software developers, data scientists, and system analysts, contrasts with diminishing opportunities in less skill-intensive sectors.
  • Implementing AI and machine learning in financial services requires more workers with expertise in these technologies while reducing the need for traditional banking roles.
  • The shift in healthcare towards advanced diagnostic tools and telemedicine necessitates healthcare workers with skills to operate complex medical equipment and manage digital health records, impacting traditional roles in healthcare.
  • ...
• Counter-Example(s):
  • Factor-Neutral Technical Change, which affects all workers equally regardless of skill level.
  • Capital-Biased Technical Change, which favors capital over labor.
  • Autor-Levy-Murnane Hypothesis, which focuses on the task-based nature of job changes due to technology.
• See: Capital–Skill Complementarity, Elasticity of Substitution, Technological Unemployment, High-Skill Worker.

---

---

References

2015

• http://www.dictionaryofeconomics.com/article?id=pde2008_S000493
  • QUOTE: Skill-biased technical change is a shift in the production technology that favours skilled over unskilled labour by increasing its relative productivity and, therefore, its relative demand. Traditionally, technical change is viewed as factor-neutral. However, recent technological change has been skill-biased. Theories and data suggest that new information technologies are complementary with skilled labour, at least in their adoption phase. Whether new capital complements skilled or unskilled labour may be determined endogenously by innovators’ economic incentives shaped by relative prices, the size of the market, and institutions. The ‘factor bias’ attribute puts technological change at the center of the income-distribution debate.

2014

• (Brynjolfsson & McAfee, 2014) ⇒ Erik Brynjolfsson, and Andrew McAfee. (2014). “The Second Machine Age: Work, Progress, and Prosperity in the Time of Brilliant Technologies." W W Norton & Company. ISBN:0393239357
  • QUOTE: The third argument for technological unemployment may be the most troubling of all. It goes beyond “temporary” maladjustments. As described in detail in chapters 8 and 9, recent advances in technology have created both winners and losers via skill-biased technical change, capital-biased technical change, and the proliferation of superstars in winner-take-all markets.

2004

• (Spitz, 2004) ⇒ Alexandra Spitz. (2004). “Are Skill Requirements in the Workplace Rising. Stylized Facts and Evidence on Skill-biased Technological Change." Stylized Facts and Evidence on Skill-Biased Technological Change

2003

• (Autor et al., 2003) ⇒ David H. Autor, Frank Levy, and Richard J Murnane. (2003). “The Skill Content of Recent Technological Change: An Empirical Exploration.” In: The Quarterly Journal of Economics. doi:10.1162/003355303322552801
  • QUOTE: A wealth of quantitative and case-study evidence documents a striking correlation between the adoption of computer-based technologies and the increased use of college-educated labor within detailed industries, within firms, and across plants within industries. ... This robust correlation is frequently interpreted as evidence of skill-biased technical change.

2002

• (Card & DiNardo, 2002) ⇒ David Card, and John E. DiNardo . (2002). “Skill Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles." No. w8769. National Bureau of Economic Research,

1999

• (Bresnahan et al., 1999) ⇒ Timothy F Bresnahan, Erik Brynjolfsson, and Lorin M Hitt. (1999). “Information Technology, Workplace Organization and the Demand for Skilled Labor: Firm-level Evidence." doi:10.3386/w7136
  • QUOTE: Recently, the relative demand for skilled labor has increased dramatically. We investigate one of the causes, skill-biased technical change. Advances in information technology (IT) are among the most powerful forces bearing on the economy.

1997

• (Berman et al., 1997) ⇒ Eli Berman, John Bound, and Stephen Machin. (1997). “Implications of Skill-biased Technological Change: International Evidence." No. w6166 . National Bureau of Economic Research,

---