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Measuring Skill Intensity Of Occupations With Imperfect Substitutability Across Skill Types

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Executive Summary

In absence of a model-based measure of occupational skill-intensity, the literature on wage inequality cannot consistently track technological progress on occupational level - a key ingredient of recent theories of labor market polarization. In this paper, the author uses the March CPS data from 1983 to 2002 to estimate such a measure corresponding to occupation-specific relative productivities of college and high-school educated. With imperfect substitution across skill types, the measurement of relative productivities requires estimation of substitution elasticities, and the author proposes a simple strategy to obtain these.

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