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Equipment Investment and the Relative Demand for Skilled Labor: International Evidence

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  • Karnit Flug
  • Zvi Hercowitz

Abstract

This paper estimates the effects of equipment investment on relative wages and employment of skilled labor and explores their dynamics. The basic hypothesis is that they are positive, due to either equipment-skill complementarity or to skill advantage in technology adoption. Using a panel data set with a wide rage of countries, the relative wage and relative employment of skilled workers are regressed on lagged investment in machinery and other relevant variables. The results indicate a strong, positive effect of machinery investment on the relative demand for skilled labor.

Suggested Citation

  • Karnit Flug & Zvi Hercowitz, 1996. "Equipment Investment and the Relative Demand for Skilled Labor: International Evidence," Research Department Publications 4042, Inter-American Development Bank, Research Department.
    • Handle: RePEc:idb:wpaper:4042
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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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