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Capital-Skill Complementarity and Inequality in Sweden

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  • Lindquist, Matthew J.

    ()
    (Swedish Institute for Social Research, Stockholm University)

Abstract

Income inequality increased in Sweden during the 1980’s and 90’s as did the returns to higher education. The main conclusion of this study is that increased income inequality between high and low skilled workers is demand driven and is due to the presence of capital-skill complementarity in production. Increased investments in new, more efficient capital equipment, together with a slowdown in the growth rate of skilled labor, have raised the ratio of effective capital inputs per skilled worker, which, in turn, has increased the relative demand (and market return) for skilled labor through the capital-skill complementarity mechanism.

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Bibliographic Info

Paper provided by Swedish Institute for Social Research in its series Working Paper Series with number 2/2005.

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Length: 30 pages
Date of creation: 08 Feb 2005
Date of revision:
Handle: RePEc:hhs:sofiwp:2005_002

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Postal: SOFI, Stockholm University, SE-10691 Stockholm, Sweden
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Keywords: capital-skill complementarity; inequality; relative wages; skill premium; university wage premium;

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References

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  1. Per-Anders Edin & Bertil Holmlund, 1995. "The Swedish Wage Structure: The Rise and Fall of Solidarity Wage Policy?," NBER Chapters, in: Differences and Changes in Wage Structures, pages 307-344 National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Salvador Ortigueira, 2011. "The rise and fall of centralized wage bargaining," Economics Working Papers we1129, Universidad Carlos III, Departamento de Economía.
  2. Yoshinori Kurokawa, 2010. "A Survey of Trade and Wage Inequality: Anomalies, Resolutions, and New Trends," Tsukuba Economics Working Papers 2010-007, Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba.
  3. Catia Batista, 2007. "Joining the EU: Capital Flows, Migration and Wages," Economics Series Working Papers 342, University of Oxford, Department of Economics.
  4. Jianpo Xue & Chong K. Yip, 2012. "Aggregate Elasticity of Substitution and Economic Growth: A Synthesis," DEGIT Conference Papers c017_011, DEGIT, Dynamics, Economic Growth, and International Trade.
  5. Bergh, Andreas & Nilsson, Therese, 2010. "Do liberalization and globalization increase income inequality?," European Journal of Political Economy, Elsevier, vol. 26(4), pages 488-505, December.
  6. Anders Björklund & Richard Freeman, 2008. "Searching for Optimal Inequality/Incentives," NBER Working Papers 14014, National Bureau of Economic Research, Inc.
  7. Lindquist, Matthew J., 2002. "Capital-Skill Complementarity and Inequality Over the Business Cycle," Research Papers in Economics 2002:14, Stockholm University, Department of Economics, revised 01 Sep 2003.
  8. Domeij, David & Ljungqvist, Lars, 2006. "Wage Structure and Public Sector Employment: Sweden versus the United States 1970-2002," CEPR Discussion Papers 5921, C.E.P.R. Discussion Papers.
  9. Manoj Atolia & Yoshinori Kurokawa, 2008. "Variety Trade and Skill Premium in a Calibrated General Equilibrium Model: The Case of Mexico," Working Papers wp2008_11_03, Department of Economics, Florida State University.
  10. Magnus Gustavsson, 2007. "The 1990s rise in Swedish earnings inequality -- persistent or transitory?," Applied Economics, Taylor & Francis Journals, vol. 39(1), pages 25-30.
  11. Peter Birch Sørensen, 2006. "Can Capital Income Taxes Survive? And Should They?," EPRU Working Paper Series 06-06, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  12. Peter Birch Sørensen, 2006. "Can Capital Income Taxes Survive? And Should They?," CESifo Working Paper Series 1793, CESifo Group Munich.
  13. Michael Stimmelmayr, 2009. "Wage Inequality in Germany: Disentangling Demand and Supply Effects," CESifo Working Paper Series 2802, CESifo Group Munich.
  14. Lilia Maliar & Serguei Maliar, 2006. "Capital-Skill Complementarity And Steady-State Growth," Working Papers. Serie AD 2006-15, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  15. Sang-Wook (Stanley) Cho & Juliàn P. Dìaz, 2014. "Accounting for Skill Premium Patterns during the EU Accession: Productivity or Trade?," Discussion Papers 2014-14, School of Economics, The University of New South Wales.

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