Labor Market Shifts and the Price Puzzle RevisitedThis paper examines the relationship between price growth and skill intensity across 150 manufacturing industries between 1989 and 1995. There are two main findings. First, wage growth and intermediate goods price increases are passed through to final product prices roughly in proportion to their factor shares. Second, product prices have grown relatively less in sectors that more intensively utilize less-skilled labor. The latter finding is consistent with the Stolper-Samuelson theory of expanded trade with countries that are abundant in less-skilled workers, as well as with some models of technological change. |
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Page 2
... skill - biased technological change for price growth are ambiguous . As several trade economists have emphasized , technological change that increases total factor productivity ( TFP ) in sectors that intensively utilize highly skilled ...
... skill - biased technological change for price growth are ambiguous . As several trade economists have emphasized , technological change that increases total factor productivity ( TFP ) in sectors that intensively utilize highly skilled ...
Page 3
... skill relationship has been re - examined by Sachs and Shatz ( 1994 ) and Leamer ( 1993 ) .4 Unlike the earlier studies , these papers conclude that less - skill - intensive industries have experienced somewhat slower price growth . But ...
... skill relationship has been re - examined by Sachs and Shatz ( 1994 ) and Leamer ( 1993 ) .4 Unlike the earlier studies , these papers conclude that less - skill - intensive industries have experienced somewhat slower price growth . But ...
Page 7
... growth of unskilled and skilled workers , respectively . A necessary implication of the Stolper - Samuelson explanation of trade - induced widening wage inequality is that b2 > b . That is , prices are growing relatively faster in the skill ...
... growth of unskilled and skilled workers , respectively . A necessary implication of the Stolper - Samuelson explanation of trade - induced widening wage inequality is that b2 > b . That is , prices are growing relatively faster in the skill ...
Common terms and phrases
Annual Survey average education b₂ Bhagwati BLS Producer bottom 10 industries CATHERWOOD LIBRARY coefficients on skilled column cost of capital Current Population Survey decile Dependent Variable estimated using WLS factor shares fraction of production fraction of workers Fraction Production Workers growth and skill high school dropout human capital's share Increase in Output Independent Variable Mean input shares intermediate goods prices labor market shifts Lawrence and Slaughter Leamer less-skilled workers measure of skill Men's and Boy's Nightwear Number of Observations Output Prices percent price growth Producer Price Index Proportionate growth Proportionate Increase Regressions were estimated relationship between price Sachs and Shatz share of production share of workers SIC codes skill intensity skilled and unskilled skilled labor's share skilled workers Standard errors Survey of Manufacturing Table Total Factor Productivity unskilled labor's share unskilled workers value of shipments variable definitions Variable Mean SD variable was calculated wage and intermediate Weighted Mean weights are 1988