Directed technical change is to a large extent driven by changes in the supply of workforce skills. I demonstrate that directed technical change does not respond to changes in the skill saturation of the workforce in a way that fully reflects supply of the actual existing skill level. I estimate...

This paper generalizes the business cycle model in Jovanovic (2006) along two important and meaningful dimensions: i) more general utility function; ii) more realistic distribution properties of the productivity shocks. Unlike the original model, I assume the power utility function of the...