Trends in the Share of Skilled Occupations in Total Employment

The change in the share of skilled occupations in total employment is broken down into changes in the skill intensities of industries weighted by their shares in employment, changes in the shares of industries in employment weighted by their skill intensities, and an interaction term. Claims about the three terms – associated with the product life cycle and degradation of labour hypotheses – are assessed theoretically and empirically. A two‐sector general equilibrium model is used to show from what assumptions the claims might be deduced. The claims are compared with US data for the 1970s and projections for the 1990s.