New Goods and the Relative Demand for Skilled Labor

This paper provides data on the output and factor payments of new goods for every 4-digit industry in the U.S. manufacturing sector in the late 1970s and 1980s. For the entire manufacturing sector, the new goods ’ average skilled-labor intensity exceeds the old goods ’ by over 40%, and new goods can account for about 30 % of the increase in the relative demand for skilled labor. Since new goods provide a direct measure of technology, this paper offers new evidence that technology has shifted demand in favor of skilled labor, consistent with the technology-skill-complementarity hypothesis (JEL J31, O30).