Working Paper

Neutral Technological Change and the Skill Premium

Thomas Moutos
CESifo, Munich, 2000

CESifo Working Paper No. 385

We construct a two sector general equilibrium model in which one sector produces a homogeneous good and the other sector produces a vertically differentiated good. We demonstrate that uniform (across sectors) and (Hicks) neutral technological change can cause an increase in the skill premium.

Keywords: Technological change, skill premium, differentiated products