Economic growth and economic development 671

Introduction to Modern Economic Growth
College wage premium

Rel. supply of college skills
.8

.6
.5
.4

.4
.2

.3

0
39

49

59

69
year

79

89

96

Relative Supply of College Skills and College Premium
Figure 15.1. Relative supply of college graduates and the college
premium in the U.S. labor market.

happy to treat the bias of technological change as exogenous, this is not
entirely satisfactory. We have seen that understanding the endogenous
nature of technology is important for our study of cross-country income
differences and the process of modern economic growth. It is unlikely that,
while the amount of aggregate technological change is endogenous, the bias
of technological change is entirely exogenous. It is therefore important to
study the determinants of endogenous bias of technological change and ask
why technological change has become more skill biased in recent decades.
(2) This conclusion is strengthened when we look at the historical process of
technological change. In contrast to the developments during the recent
decades, technological changes during the late 18th and early 19th centuries
657

Rel. supply of college skills

College wage premium

.6