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The Effects of Factor Prices and Technological Change on the Occupational Demand for Labor: Evidence from Canadian Telecommunications

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  • Michael Denny
  • Melvyn Fuss

Abstract

This paper investigates the effect of automation on the occupational demand for labor using modern econometric demand theory. We are able to estimate labor demand functions derived from a production process characterized by variable elasticities of substitution, nonhomothetic output expansion effects, and nonneutral technical change. The model is applied to a large Canadian telecommunications firm, Bell Canada, for the period 1952-1972 when detailed data on four occupational groups, capital, materials, output, and the extent of automation are available. Our empirical results demonstrate the strong effects of innovative activity in this industry. Technical change was capital-using and labor-saving, with the labor-saving impact being felt most severely by the least skilled occupations.

Suggested Citation

  • Michael Denny & Melvyn Fuss, 1983. "The Effects of Factor Prices and Technological Change on the Occupational Demand for Labor: Evidence from Canadian Telecommunications," Journal of Human Resources, University of Wisconsin Press, vol. 18(2), pages 161-176.
  • Handle: RePEc:uwp:jhriss:v:18:y:1983:i:2:p:161-176
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    Citations

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    Cited by:

    1. Ann P. Bartel & Frank R. Lichtenberg, 1985. "The Comparative Advantage of Educated Workers in Implementing New Technology: Some Empirical Evidence," NBER Working Papers 1718, National Bureau of Economic Research, Inc.
    2. Paolo Epifani & Gino Gancia, 2006. "Increasing Returns, Imperfect Competition, and Factor Prices," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 583-598, November.
    3. Werner Antweiler & Daniel Trefler, 2002. "Increasing Returns and All That: A View from Trade," American Economic Review, American Economic Association, vol. 92(1), pages 93-119, March.
    4. Hollanders, Hugo & Weel, Bas ter, 1999. "Skill-Biased Technical Change: On Endogenous Growth, Wage Inequality and Government Intervention," Research Memorandum 013, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    5. Bruinshoofd, Allard & Hollanders, Hugo & Weel, Bas ter, 1999. "Knowledge Spillovers and Wage Inequality: An Empirical Investigation of Knowledge-Skill Complementarity," Research Memorandum 008, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    6. Hollanders, Hugo & Weel, Bas ter, 1998. "Skill-Biased Technological Change in an Endogenous Growth Model," Research Memorandum 016, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    7. Bruinshoofd, Allard & Weel, Bas ter, 1998. "Skill-biased technical change: On technology and wages in the Netherlands," Research Memorandum 021, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    8. Li, Fang-Ling, 1990. "Capital-labor complementarity for different educational groups in U.S. manufacturing," ISU General Staff Papers 1990010108000017615, Iowa State University, Department of Economics.

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