This project studies the evolution of the aggregate skill premium in Portugal, by using Quadros de Pessoal, a comprehensive employer-employee dataset that allows us to proxy skills using either education or occupational groups. Between 1995-2021, the skill premium dropped by 16-22 percent, depending on the measure, in stark contrast to the increasing skill premium observed in the US. To rationalise this, we study how well the Krusell et al. (2000) model, characterised by capital-skill complementarity, accounts for the Portuguese data. Our results suggest that the elasticity of substitution between skilled labour and capital equipment is lower in the Portuguese case, whereas the elasticity of substitution between skilled and unskilled labour fits within the estimates from the literature. Moreover, the model can account for the recent drop in the labor share.