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The Multi-Dimensional Nature of Labor Demand and Skill-Biased Technical Change

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    Abstract

    Investigating the robustness of the skill-biased technical change hypothesis, this analysis incorporates two novel features. First, effective labor is modeled as the product of a quantity measure - number of employees with a given level of education - and a quality index, depending on, i.a., demographic characteristics and fields-of-study. Second, low-skilled labor is more disaggregated than in earlier studies. A fully specified structural model is used, containing demand equations for four categories of labor, two types of capital and intermediate goods. The empirical application covers 24 industries in the Swedish manufacturing sector 1985-1995. The skill-bias is further corroborated: it is confirmed although the specification of effective labor is supported. Substantial differences are, however, found among the low-skilled.

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    Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 518.

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    Length: 64 pages
    Date of creation: 19 Aug 1999
    Date of revision: 08 Dec 1999
    Handle: RePEc:hhs:iuiwop:0518
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    Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden

    Phone: +46 8 665 4500
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    Keywords: Robustness Test; Labor Quality; Heterogeneous Low-Skilled; Manufacturing Application;

    Find related papers by JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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    Cited by:

    1. Matthew J. Lindquist, 2005. "Capital-Skill Complementarity and Inequality in Sweden," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(4), pages 711-735, December.
    2. Savvidou, Eleni, 2003. "The Relationship Between Skilled Labor and Technical Change," Working Paper Series 2003:27, Uppsala University, Department of Economics.
    3. Isacsson, Gunnar & Regnér, Håkan, 2007. "Changes during the 1990's in the location of Swedish Power Couples: Consequences and Explanations," Working Paper Series 1/2007, Swedish Institute for Social Research.
    4. Isacsson, Gunnar, 2005. "External effects of education on earnings: Swedish evidence using matched employee-establishment data," Working Paper Series 2005:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.

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