Tuesday, March 8, 2011

Krugman on Skills Biased Technological Change

Krugman has two good posts (here and here) on what economists call "skill biased technological change" - technological change that influences the skill-composition of labor demand. Traditionally, the literature has covered change biased in favor of skilled workers (hence the name).

In the second post, he citest the fairly well known Autor, Levy, and Murnane (2003) article. Levy and Murnane also have a pretty good book on the subject that I read a few years back.

Krugman cites a case of lawyer-displacing technology. I also read an interesting article this weekend about psychiatrist-displacing technology in The Economist.

DeLong has thoughts here, Ezra Klein has thoughts here.

I've always found this to be a fascinating and important area of work - I don't have time to go through each piece now and comment in detail, but I wanted to provide the links. One of the things that isn't mentioned here is a discussion of mid-level skills, and their role in driving the college wage premium. This is a strain of the discussion that I get a lot at the Urban Institute from guys like Bob Lerman (of American University, btw), Harry Holzer, and Hal Salzman (formerly of the Institute - my co-author on my NBER engineering labor supply chapter). Anyway - lots to talk about. It's no surprise they don't get into that here.


  1. This is assuming that there is such a thing as a significant technological change that doesn't influence the 'skill-composition of labor demand?'

    The biggest factor in reducing the college premium is obviousiy the increased supply.

  2. Economists who talk about "skills-biased technological change" or the "college wage premium" as explaining changes in income distribution in the US in the last few decades are exhibiting mumpsimus. Some are fools or knaves.

    Marginal productivity is not a theory of income distribution, and wages and employment cannot be explained by the interaction of well-behaved supply and demand curves.

    James Galbraith knows this. Paul Krugman is slowly coming around, and I read his recent column as a rejection of the notion of skills-biased technological change.

  3. Robert -
    If there are institutional frictions presenting a significant and concentrated share of the population from even graduating high school, I imagine a marginal productivity theory has far more to say about income distribution than if everyone was unconstrained by institutions to respond to skill premia.


All anonymous comments will be deleted. Consistent pseudonyms are fine.