Human Capital Responses to Technological Change in the Labor Market
In a broad sense, the relation of human capital to economic growth is
reciprocal. This study focuses more narrowly on labor market consequences of
human capital adjustments to the pace of technological change. Using Jorgensons
multifactor productivity growth indexes for industrial sectors in the 1960's and 1970's
the study explores effects of differential pace of technological changes on industry
demands for educated and trained workers as reflected in PSID data covering the
1968 to 1983 period. The findings show relative increases both in quantity
demanded (utilization) and in price (wages) of skilled workers in the more
progressive sectors. Steeper wage profiles, lesser turnover, and lesser
unemployment characterize labor in sectors whose productivity grew faster in
preceding years. The growth of sectoral capital intensity produces similar effects.
But, as newer vintages of capital contain new technology, the skill bias of capital
intensity partly reflects the skill bias of technology.
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