Analyzing Skilled And Unskilled Labor Efficiencies In US

In this paper, using a production framework in which skilled and unskilled labors are imperfect substitutes, the authors analyze the time paths of the efficiencies of skilled and unskilled labor and their implications for wage inequality and economic growth. They find no evidence that supports the common view that there has been acceleration in skilled biased technical change. Indeed, after 1973 the efficiency of skilled labor grew more slowly than it had from 1961 to 1973. More interestingly, they find that after 1973 there has been a substantial decline in the efficiency of unskilled labor, implying that the decline in unskilled labor efficiency has significantly contributed to the widening in the U.S. wage structure.