Demand for less-skilled workers plummeted in developed countries in the 1980s. In open economies, pervasive skill-biased technological change (SBTC) can explain this decline. SBTC tends to increase the domestic supply of unskill-intensive goods by releasing less-skilled labor. The more countries experiencing a SBTC, the greater its potential to decrease the relative wages of less-skilled labor by increasing the world supply of unskill-intensive goods. We find strong evidence for pervasive SBTC in developed countries. Most industries increased the proportion of skilled workers despite generally rising or stable relative wages. Moreover, the same manufacturing industries simultaneously increased demand for skills in different countries. Many developing countries also show increased skill premiums, a pattern consistent with SBTC.

In this paper we study the causal impact of police on crime, looking at what happened to crime and police before and after the terror attacks that hit central London in July 2005. The attacks resulted in a large redeployment of police officers to central London as compared to outer London. During this time, crime fell significantly in central relative to outer London. The instrumental variable approach we use uncovers an elasticity of crime with respect to police of approximately -0.3 to -0.4, so that a 10 percent increase in police activity reduces crime by around 3 to 4 percent. JEL: K42