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The Supply of Skill and Endogenous Technical Change: Evidence from a College Expansion Reform

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  • Pedro Carneiro
  • Kai Liu
  • Kjell G Salvanes

Abstract

We examine the labor market consequences of an exogenous increase in the supply of skilled labor in several municipalities in Norway, resulting from the construction of new colleges in the 1970s. We find that skilled wages increased as a response, suggesting that along with an increase in the supply there was also an increase in demand for skill. We also show that college openings led to an increase in the productivity of skilled labor and investments in R&D. Our findings are consistent with models of endogenous technical change where an abundance of skilled workers may encourage firms to adopt skill-complementary technologies.

Suggested Citation

  • Pedro Carneiro & Kai Liu & Kjell G Salvanes, 2023. "The Supply of Skill and Endogenous Technical Change: Evidence from a College Expansion Reform," Journal of the European Economic Association, European Economic Association, vol. 21(1), pages 48-92.
    • Handle: RePEc:oup:jeurec:v:21:y:2023:i:1:p:48-92.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvac032
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    1. Daron Acemoglu & Amy Finkelstein, 2008. "Input and Technology Choices in Regulated Industries: Evidence from the Health Care Sector," Journal of Political Economy, University of Chicago Press, vol. 116(5), pages 837-880, October.
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    Cited by:

    1. Barbara Boelmann, 2024. "Women’s Missing Mobility and the Gender Gap in Higher Education: Evidence from Germany’s University Expansion," ECONtribute Discussion Papers Series 280, University of Bonn and University of Cologne, Germany.

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    More about this item

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O00 - Economic Development, Innovation, Technological Change, and Growth - - General - - - General

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