Introduction to Modern Economic Growth appear to have been unskill-biased (skill-replacing) The artisan shop was replaced by the factory and later by interchangeable parts and the assembly line Products previously manufactured by skilled artisans started to be produced in factories by workers with relatively few skills, and many previously complex tasks were simplified, reducing the demand for skilled workers Mokyr (1990, p 137) summarizes this process as follows: “First in firearms, then in clocks, pumps, locks, mechanical reapers, typewriters, sewing machines, and eventually in engines and bicycles, interchangeable parts technology proved superior and replaced the skilled artisans working with chisel and file.” So why was technological change, that has been generally skill biased over the 20th century, biased towards unskilled workers in the 19th century? (3) Beginning in the late 1960s and the early 1970s, both unemployment and the share of labor in national income increased rapidly in a number of continental European countries During the 1980s, unemployment continued to increase, but the labor share started a steep decline, and in many countries, ended up below its initial level Blanchard (1997) interprets the first phase as the response of these economies to a wage-push by workers, and the second phase as a possible consequence of capital-biased technological changes Is there a connection between capital-biased technological changes in European economies and the wage push preceding it? (4) As we have seen in Chapters and 8, balanced economic growth is only possible when technological change is asymptotically Harrod-neutral, i.e., purely labor augmenting If technological change is not labor augmenting, we should not expect equilibrium growth to be balanced But a range of evidence suggests that modern economic growth has been relatively balanced Is there any reason to expect technological change to be endogenously labor augmenting? (5) The past several decades have experienced a large increase in the volume of international trade and a rapid process of globalization Do we expect 658