Not for Citations Technological Change and Returns to Education: The Implications for the S&E Labor Market

This paper analyzes the earnings effect of skill-biased technological change (SBTC), focusing on the comparison of science and engineering (S&E) and non-S&E occupations. In the analysis, we assert that S&E occupations and non-S&E occupations differ in the nature of skill requirements and their susceptibility to technological change; and consequently the earnings effects of SBTC also demonstrate a similar impact. For the empirical analysis, the modified Mincerian earnings equations are estimated by quantile regressions as well as the OLS and two-stage estimation method. Fitted to Korean panel data, the earning-enhancing effect of skill-biased technological change is observed for male workers, not only for those in S&E occupations but also for those in non-S&E occupations. Such an effect is not observed for women in S&E occupations, and rather turns even negative for women in non-S&E occupations; envisaging a relatively large occurrence of work interruption of married women in Korea, we conjecture that this may reflect women workers' skill deterioration taking place during a work interruption. The earnings effect of SBTC is most apparent for male workers in the higher quantiles of earnings distribution, implying that those who are highly educated and have high unobserved ability gain most from SBTC. 2. Ⅰ Introduction This paper intends to compare the impact of technological change upon the educational earnings premium between S&E occupations and non-S&E occupations. S&E and non-S&E occupations are presumed to differ according to the nature of primary job skills and the responsiveness to technological change. S&E occupations require more of R&D-related or S&E-specific professional skills, while non-S&E occupations require more of general multi-facet skills that can be applied to a relatively large spectrum of jobs. If that is the case, those who are employed in S&E occupations and those in non-S&E occupations are likely to differ with regard to how they respond to external technological shock and how their productivity and earnings are affected by such technological shock. A substantial volume of research has recently demonstrated the positive impact of technological change on the educational earnings premium, strongly supporting the hypothesis of skill-biased technological change (SBTC). But there is a paucity of literature that examines the varying effects of technological change as it is experienced by those with skills of differing natures. This paper is unique in that it explicitly examines how the nexus between technological change and educational earnings premium differs for different skill traits – skills inherent in S&E and …