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Abstract

Using the EU KLEMS dataset we test the capital-skill complementarity hypothesis in a cross-section of sectors in Spain between 1980 and 2005. We analyze three groups of workers, who are classed according to skill level: high, medium and low. Capital assets have been broken down into ICT (information and communication technologies) assets and non-ICT assets. Acquisition and usage costs of ICT assets declined throughout the period studied, both in absolute terms and relative to the other capital assets and workers. Our principal finding is that the substitutibility between workers and ICT assets falls as worker skill level rises. In fact, the ICT assets were strongly complement with highly skilled workers and were not substitutive with them. Throughout the period analyzed, the fraction of employed medium- and high-skill workers rose by 21% and 12%, respectively, to the disadvantage of low-skill workers. After decomposing these changes, we found that the latter were dominated by an ajustment within sectors more than by a composition effect or adjustment between sectors. These adjustments may be explained by reference to the estimated elasticities of substitution.

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Bibliographic Info

Paper provided by Universidad Pablo de Olavide, Department of Economics in its series Working Papers with number 08.12.

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Length: 33 pages
Date of creation: Nov 2008
Date of revision:
Handle: RePEc:pab:wpaper:08.12

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Related research

Keywords: capital-skill complementarity; ICT; translog cost function; elasticity of substitution.;

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Find related papers by JEL classification:

• E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
• J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
• J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
• O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

This paper has been announced in the following NEP Reports:

• NEP-ALL-2008-12-01 (All new papers)
• NEP-BEC-2008-12-01 (Business Economics)
• NEP-HRM-2008-12-01 (Human Capital & Human Resource Management)
• NEP-ICT-2008-12-01 (Information & Communication Technologies)
• NEP-KNM-2008-12-01 (Knowledge Management & Knowledge Economy)
• NEP-LAB-2008-12-01 (Labour Economics)

References

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Cited by:

1. Manuel Hidalgo Pérez & Walter García-Fontes, 2009. "Estimating Human Capital Externalities:The Case of Spanish Regions," Working Papers 09.17, Universidad Pablo de Olavide, Department of Economics.

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