Wednesday, October 15, 2008

Is skill-biased technological change driving education improvements?

Soon after yesterday's post about the surprising increase in US adult literacy between ages 16-17 and 26-30, I stumble in the latest NEP dispatch on a working paper that seems relevant. Diego Restuccia and Guillaume Vandenbroucke point out that educational attainment as increased constantly from 1940 to 2000 and try to find a reason for it. They conclude that the skill premium in wages is the main motivator for people to get more educated. So far so good.

But they also show that all this is driven by skill-biased technological change. This is where the results do not seem to square with the paper discussed yesterday. If US students catch up late on adult literacy, it is because they are getting general education in college. In Europe, however, college is specialized from the start. If this is an equilibrium outcome, I would have expected technological change to be skilled-biased in Europe and be more general in the US. This is confirmed by the low mobility of the European labor force (and the ensuing high unemployment rate) that has a hard time changing sectors or occupations if necessary, at least compared to the United States.

What am I missing?

No comments: