CHANGES IN THE DEMAND FOR SKILLED LABOR WITHIN UNITED-STATES MANUFACTURING - EVIDENCE FROM THE ANNUAL SURVEY OF MANUFACTURES

This paper investigates the shift in demand away from unskilled and to ward skilled labor in U. S. manufacturing over the 1980s. Production l abor-saving technological change is the chief explanation for this shi ft. That conclusion is based on three facts: (1) the shift is due most ly to increased use of skilled workers within the 450 industries in U. S. manufacturing rather than to a reallocation of employment between industries, as would be implied by a shift in product demand due to tr ade or to a defense buildup; (2) trade- and defense-demand are associa ted with only small employment reallocation effects; (3) increased use of nonproduction workers is strongly correlated with investment in co mputers and in R&D.