Supply of human capital in times of skill biased technological change

This paper analyses the skill supply consequences of skill biased technological change. In a simple microeconomic model it is shown that higher skill wage mark-ups as well as higher relative unskilled unemployment - frequently attributed to skill biased technological change - induce over-qualification. Therefore over-qualification is an equilibrium mechanism when skill rents increase. A shift-share analysis on the basis of representative German individual data (the Mikrozensus) shows indeed that the qualification levels for jobs with given characteristics increased between 1991 and 1995 in Germany. The job characteristics analysed are type of activity mainly pursued, place of activity or position in the enterprise. These findings are interpreted as evidence for increasing over-qualification in the wake of skill biased technological change.