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

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  • Flug, K.
  • Hercowitz, Z.

Abstract

The effects of equipment investment on relative wages and employment of skilled labor are estimated. The basic hypothesis is that such effecst are positive, due to the presence of either equipment-skill complementarity or skill advantage in technology adoption. Using a panel data set for a wide range of countries, the relative wage and relative employment of skilled workers are regressed on lagged investment in machinery and other relevant variables.

Suggested Citation

  • Flug, K. & Hercowitz, Z., 1998. "Equipment Investment and the Relative Demand for Skilled Labour: International Evidence," Papers 05-98, Tel Aviv.
  • Handle: RePEc:fth:teavfo:05-98
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    1. Greenwood, Jeremy & Yorukoglu, Mehmet, 1997. "1974," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 46(1), pages 49-95, June.
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    5. Griliches, Zvi, 1969. "Capital-Skill Complementarity," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 465-468, November.
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    7. Boyan Jovanovic, 1995. "Learning and Growth," NBER Working Papers 5383, National Bureau of Economic Research, Inc.
    8. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 367-397.
    9. Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 1997. "Long-Run Implications of Investment-Specific Technological Change," American Economic Review, American Economic Association, pages 342-362.
    10. Robert J. Gordon, 1990. "The Measurement of Durable Goods Prices," NBER Books, National Bureau of Economic Research, Inc, number gord90-1, January.
    11. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
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    Cited by:

    1. John Duffy & Chris Papageorgiou & Fidel Perez-Sebastian, 2004. "Capital-Skill Complementarity? Evidence from a Panel of Countries," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 327-344, February.
    2. Casarico, Alessandra & Devillanova, Carlo, 2008. "Capital-skill complementarity and the redistributive effects of Social Security Reform," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 672-683, April.
    3. Hornstein, Andreas & Krusell, Per & Violante, Giovanni L., 2005. "The Effects of Technical Change on Labor Market Inequalities," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 20, pages 1275-1370 Elsevier.
    4. Slavík, Ctirad & Yazici, Hakki, 2014. "Machines, buildings, and optimal dynamic taxes," Journal of Monetary Economics, Elsevier, pages 47-61.
    5. Li-Ju Chen, 2016. "Women in Politics: A New Instrument for Studying the Impact of Education on Growth," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 12(2), pages 251-275, August.
    6. López-Bazo, Enrique & Moreno, Rosina, 2008. "Does human capital stimulate investment in physical capital?: Evidence from a cost system framework," Economic Modelling, Elsevier, vol. 25(6), pages 1295-1305, November.
    7. Fidel Pérez Sebastián, 2008. "Testing Capital-Skill Complementarity Across Sectors in a Panel of Spanish Regions," Working Papers. Serie EC 2008-11, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    8. De Palma, Francesco & Seegmuller, Thomas, 2005. "Dual Labor Market And Endogenous Fluctuations," Macroeconomic Dynamics, Cambridge University Press, vol. 9(03), pages 398-411, June.
    9. Eduardo Lora & Mauricio Olivera, 1998. "Macro Policy and Employment Problems in Latin America," Research Department Publications 4116, Inter-American Development Bank, Research Department.
    10. Aghion, Philippe & Howitt, Peter & Violante, Giovanni L, 2002. "General Purpose Technology and Wage Inequality," Journal of Economic Growth, Springer, vol. 7(4), pages 315-345, December.
    11. Lydon, Reamonn & Scally, John, 2014. "Trends in Business Investment," Quarterly Bulletin Articles, Central Bank of Ireland, pages 76-89, January.
    12. Eduardo Lora & Mauricio Olivera, 1998. "Políticas macro y problemas del empleo en América Latina," Research Department Publications 4117, Inter-American Development Bank, Research Department.
    13. Sami SAAFI & Fouzi SBOUI, 2011. "LES OPPORTUNITES DES INVESTISSEMENTS DIRECTS ETRANGERS LES OPPORTUNITES DES INVESTISSEMENTS DIRECTS ETRANGERS, DIFFUSION TECHNOLOGIQUE ET DEMANDE DE LA MAIN-D’OEUVRE PAR QUALIFICATION DES INDUSTRIES T," Working Papers 240, Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO / Research Unit on Industry and Innovation.
    14. Richard G. Harris & Peter E. Robertson, 2007. "Dynamic Adjustments to Terms of Trade Shocks: The USA Productivity Boom and Australia," Discussion Papers 2007-16, School of Economics, The University of New South Wales.
    15. repec:pri:cepsud:113krusell is not listed on IDEAS
    16. Carlo Devillanova & Michele Di Maio & Pietro Vertova, 2006. "Labour Mobility, Capital-Skill Complementarity and the Redistributive Effects of Trade Integration," KITeS Working Papers 188, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Nov 2006.
    17. Pandey, Manish, 2008. "Human capital aggregation and relative wages across countries," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1587-1601, December.

    More about this item

    Keywords

    INVESTMENTS ; SKILLED WORKERS;

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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