"In flexible labour markets, capital increases the productivity of skilled workers more than that of unskilled workers, and in the US faster investment is associated with wider wage inequality. But labour market institutions that keep unskilled workers' wages high also imply that firms may find it profitable to invest so as to boost those workers' productivity. Our empirical analysis based on industry-level data confirms that a higher capital intensity in Germany is associated with smaller wage differentials and with a larger share of unskilled workers in the labour costs. Changes in capital-labour ratios during the 1980s reduced wage differentials by 5-8% in German industries, while in the US capital deepening in such industries as machinery and retail was accompanied by an increase of wage differentials larger than 7%." Copyright (c) CEPR, CES, MSH, 2007.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Publisher Info
Article provided by CEPR, CES, MSH in its journal Economic Policy.
Did you know? Each page is provided with a technical contact, in case something is not right with the supplied information. See under "publisher info".