Discussion paper

DP17421 Firm-level Technological Change and Skill Demand

We quantify the contribution of  firm-level technological change to skill demand and aggregate inequality in the presence of imperfect competition in the labor market. We show that skill-biased technological change increases both the firm-level skill ratio and the skill premium, while other shocks (e.g.  firm-specific output demand shocks) cannot explain the increase in both outcomes. We exploit administrative data and a large survey measuring a broad class of firm-level technological changes from Hungary and Norway. We estimate that the aggregate college premium increases by 6.1% in Norway and by 13.8% in Hungary as a result of the skill bias in technological change.


Lindner, A, B Murakozy, B Reizer and R Schreiner (2022), ‘DP17421 Firm-level Technological Change and Skill Demand‘, CEPR Discussion Paper No. 17421. CEPR Press, Paris & London. https://cepr.org/publications/dp17421