Does the sector bias of skill-biased technical change explain changing skill premia?

This paper shows the sector bias of skill-biased technical change (SBTC) can help explain changing skill premia within countries in recent decades. Our model demonstrates that in many cases it is the sector bias of SBTC that determines SBTC's effect on relative factor prices, not its factor bias. Rising (falling) skill premia are caused by SBTC that is concentrated in skill-intensive (unskill-intensive) sectors. Our empirical findings for ten OECD countries over the 1970s and 1980s are consistent with sector bias being important. In countries when skill premia were rising (falling), SBTC was generally concentrated in skill-intensive (unskill-intensive) sectors. (C) 2002 Elsevier Science B.V. All rights reserved.