The role of capital intensity and technology usage in upgrading skills in the US labor market

This article examines the relationship between different measures of techno logical change and the change in the wage (employment) share of skilled wor kers. The capital/output ratio and the share of computer stock in total cap ital stock are used to examine the effect of both capital deepening and cap ital quality on work force structure. The results suggest that both capital deepening and investment in computers are positively correlated to the cha nge in the wage share of skilled workers. Comparing the magnitude of differ ent capital investment variables suggests that computer investment has a st ronger effect on the change in the wage share of skilled workers than does noncomputer capital investment. In addition, this article examines the effe ct of other advanced manufacturing technologies, such as flexible manufactu ring systems, robots, networks, and numerically controlled machines, on the share of skilled workers. The results indicate a positive effect of these technologies on the work force skill mix and that the effect is stronger ov er longer periods. (C) 1999 Elsevier Science Inc.