Analyzing Skilled and Unskilled Labor Efficiencies in the U.S

In this paper, I analyze the time paths of the efficiencies of skilled and unskilled labor in aproduction framework where skilled and unskilled labor are imperfect substitutes. Theirimplications for economic growth and wage inequality in the US between 1950 and 2005present two main findings. First, although skilled labor efficiency has a strong upward trend,I find no evidence of acceleration in its growth rate to support the common view that therehas been an acceleration in the new skilled-biased technologies. Second, beginning around1970, there has been a decline in the absolute level of the efficiency of unskilled labor,implying that the decline has played a significant role in the overall productivity slowdownand the substantial widening in the US wage structure