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Capital-Skill Complementarity and Inequality in Sweden

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Author Info
Lindquist, Matthew J. () (Swedish Institute for Social Research, Stockholm University)

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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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Publisher 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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Web page: http://www.sofi.su.se/
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Related research
Keywords: capital-skill complementarity inequality relative wages skill premium university wage premium

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Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. 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.
    Other versions:
  2. Lindquist, Matthew, 2001. "Capital-Skill Complementarity and Inequality in Swedish Industry," Research Papers in Economics 2001:2, Stockholm University, Department of Economics, revised 05 Mar 2003. [Downloadable!]
  3. Hibbs, Douglas Jr. & Locking, Hakan, 1996. "Wage compression, wage drift and wage inflation in Sweden," Labour Economics, Elsevier, vol. 3(2), pages 109-141, September. [Downloadable!] (restricted)
  4. Griliches, Zvi, 1969. "Capital-Skill Complementarity," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 465-68, November. [Downloadable!] (restricted)
  5. Nickell, Stephen & Bell, Brian, 1995. "The Collapse in Demand for the Unskilled and Unemployment across the OECD," Oxford Review of Economic Policy, Oxford University Press, vol. 11(1), pages 40-62, Spring.
  6. Roberto A. De Santis, 2003. "Wage Inequality in the United Kingdom: Trade and/or Technology?," The World Economy, Blackwell Publishing, vol. 26(6), pages 893-909, 06. [Downloadable!] (restricted)
  7. Laroque, Guy & Salanie, Bernard, 1989. "Estimation of Multi-market Fix-Price Models: An Application of Pseudo Maximum Likelihood Methods," Econometrica, Econometric Society, vol. 57(4), pages 831-60, July. [Downloadable!] (restricted)
  8. Per-Anders Edin & Bertl Holmlund, 1993. "The Swedish Wage Stucture: The Rise and Fall of Solidarity Wage Policy?," NBER Working Papers 4257, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. De Santis, Roberto A., 2002. "Wage inequality between and within groups: trade-induced or skill-bias technical change? Alternative age models for the UK," Economic Modelling, Elsevier, vol. 19(5), pages 725-746, November. [Downloadable!] (restricted)
  10. Mellander, Erik, 1999. "The multi-dimensional nature of labor demand and skill-biased technical change," Working Paper Series 1999:9, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  11. Francesco Caselli, 1999. "Technological Revolutions," American Economic Review, American Economic Association, vol. 89(1), pages 78-102, March. [Downloadable!] (restricted)
  12. Stephen Machin & John Van Reenen, 1998. "Technology And Changes In Skill Structure: Evidence From Seven Oecd Countries," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1215-1244, November. [Downloadable!] (restricted)
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  13. Per Krusell & Lee E. Ohanian & JosÈ-Victor RÌos-Rull & Giovanni L. Violante, 2000. "Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis," Econometrica, Econometric Society, vol. 68(5), pages 1029-1054, September.
    Other versions:
  14. Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 1997. "Long-Run Implications of Investment-Specific Technological Change," American Economic Review, American Economic Association, vol. 87(3), pages 342-62, June. [Downloadable!] (restricted)
    Other versions:
  15. Flam, Harry, 1987. " Equal Pay for Unequal Work," Scandinavian Journal of Economics, Blackwell Publishing, vol. 89(4), pages 435-50.
  16. Gustavsson, Magnus, 2004. "Changes in Educational Wage Premiums in Sweden: 1992-2001," Working Paper Series 2004:10, Uppsala University, Department of Economics.
  17. Mellander, Erik, 1999. "The Multi-Dimensional Nature of Labor Demand and Skill-Biased Technical Change," Working Paper Series 518, Research Institute of Industrial Economics, revised 08 Dec 1999. [Downloadable!]
  18. Matthew J. Lindquist, 2000. "Wage Compression and Welfare in Sweden," Econometric Society World Congress 2000 Contributed Papers 0418, Econometric Society.
    Other versions:
  19. Bergstrom, Villy & Panas, Epaminondas E, 1992. "How Robust Is the Capital-Skill Complementarity Hypothesis?," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 540-46, August. [Downloadable!] (restricted)
  20. Fredriksson, Peter, 1997. " Economic Incentives and the Demand for Higher Education," Scandinavian Journal of Economics, Blackwell Publishing, vol. 99(1), pages 129-42, March. [Downloadable!] (restricted)
  21. Hansson, Par, 2000. "Relative Demand for Skills in Swedish Manufacturing: Technology or Trade?," Review of International Economics, Blackwell Publishing, vol. 8(3), pages 533-55, August. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Matthew J. Lindquist, 2004. "Capital-Skill Complementarity and Inequality Over the Business Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(3), pages 519-540, July. [Downloadable!] (restricted)
    Other versions:
  2. Domeij, David & Ljungqvist, Lars, 2006. "Wage Structure and Public Sector Employment: Sweden versus the United States 1970-2002," Working Paper Series in Economics and Finance 638, Stockholm School of Economics. [Downloadable!]
    Other versions:
  3. Magnus Gustavsson, 2006. "The evolution of the Swedish wage structure: new evidence for 1992--2001," Applied Economics Letters, Taylor and Francis Journals, vol. 13(5), pages 279-286, April. [Downloadable!] (restricted)
  4. Catia Batista, 2007. "Joining the EU: Capital Flows, Migration and Wages," Economics Series Working Papers 342, University of Oxford, Department of Economics. [Downloadable!]
  5. 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). [Downloadable!]
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