PT  - JOURNAL ARTICLE
AU  - Bowlus, Audra
AU  - Lochner, Lance
AU  - Robinson, Chris
AU  - Suleymanoglu, Eda
TI  - Wages, Skills, and Skill-Biased Technical Change
AID  - 10.3368/jhr.0617-8889R1
DP  - 2023 Nov 01
TA  - Journal of Human Resources
PG  - 1783--1819
VI  - 58
IP  - 6
4099  - http://jhr.uwpress.org/content/58/6/1783.short
4100  - http://jhr.uwpress.org/content/58/6/1783.full
SO  - J Hum Resour2023 Nov 01; 58
AB  - While influential, the canonical supply–demand model of the wage returns to skill has faced challenges, including theoretically wrong-signed elasticities of substitution, counterintuitive paths for skill-biased technical change (SBTC), and an inability to account for observed deviations in college premia for younger versus older workers. We show that using improved estimates of skill prices and supplies that account for variation in skills across cohorts helps to explain the college premium differences between younger versus older workers and produces better out-of-sample predictions, positive elasticities of substitution between high- and low-skill workers, and a more modest role for SBTC. We further show that accounting for recession-induced jumps and trend adjustments in SBTC and linking SBTC to direct measures of information technology investment expenditures yield an improved fit, no puzzling slowdown in SBTC during the early 1990s, and a higher elasticity of substitution between high- and low-skill workers than previous ad hoc assumptions.