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  3. American Economic Review
  4. March 1999
  5. Technological Revolutions

Technological Revolutions

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Abstract

In skill-biased (deskilling) technological revolutions, learning investments required by new machines are greater (smaller) than those required by preexisting machines. Skill-biased (deskilling) revolutions trigger reallocations of capital from slow- (fast-) to fast- (slow-) learning workers, thereby reducing the relative and absolute wages of the former. The model of skill-biased (deskilling) revolutions provides insight into developments since the mid-1970s (in the 1910s). The empirical work documents a large increase in the interindustry dispersion of capital-labor ratios since 1975. Changes in industry capital intensity are related to the skill composition of the labor force.

Citation

Caselli, Francesco. 1999. "Technological Revolutions." American Economic Review, 89 (1): 78-102. DOI: 10.1257/aer.89.1.78

JEL Classification

  • O33 Technological Change: Choices and Consequences; Diffusion Processes
  • J24 Human Capital; Skills; Occupational Choice; Labor Productivity
  • J31 Wage Level and Structure; Wage Differentials