The decline in demand for unskilled labor: An empirical analysis method and its application to France

The decline in the unskilled share of French employment is chiefly due to t he slackness of domestic demand for those industries with the highest propo rtion of unskilled workers. The spread of computers has not been particular ly conducive to substitution between skilled and unskilled labor. We test a nd accept the hypothesis of technical-progress neutrality within French ind ustries. The mechanisms that generate inequality do not appear to be the sa me in France and in the United States. The source of inequality isn't so mu ch technical progress per se as its interaction with the institutions that regulate the labor market.