Policy Seminar: Unraveling the skill premium

Time: 13.00-14.00 hours
Location: CPB-office, Van Stolkweg 14, The Hague

Presentation: Alpo Willman (University of Kent)

Discussant: Stefan Boeters (CPB)

Language: English

Registration:  Please register here.

Abstract subject:
For the US the supply and wages of skilled labor relative to those of unskilled labor have grown over the postwar period. The literature has tended to explain this through “skill-biased technical change”. Empirical work has concentrated around two variants: (1) Capital-skill complementarity, and (2) Skill-augmenting technical change. Our purpose is to nest and discriminate between these two explanations. We do so in the framework of 2- and 3-level CES production function where factors are disaggregated into skilled and unskilled labor, and the capital stock into structures and equipment capital. Using a 5-equation system approach and several nesting alternatives, we retrieve estimates of the elasticities of substitution and factor augmenting technical changes. Our estimations are able to produce results in line with capitalskill- complementarity hypothesis. However, those results are outperformed results where the only source of the widening skill-premium has been skill augmenting technical change. We also show that the different explanations for SBTC have very different implications for future projected developments of the skill premium.

Policy seminars
CPB organises policy seminars for policy makers, researchers and other stakeholders. These policy seminars focus on policy implications. Policy seminars are held on Thursday from 1.00 pm. to 2.00 pm.

Seminars
CPB also organises seminars for researchers. During these seminars, always held on Tuesday from 1.00 pm. to 2.00 pm., academic papers are presented and discussed.

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