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The Supply of Skill and Endogenous Technical Change: Evidence From a College Expansion Reform

Author

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  • Carneiro, Pedro

    (University College London)

  • Liu, Kai

    (University of Cambridge)

  • Salvanes, Kjell G.

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

Abstract

We examine the labor market consequences of an exogenous increase in the supply of skilled labor in several cities in Norway, resulting from the construction of new colleges in the 1970s. We find that skilled wages increased as a response, suggesting that along with an increase in the supply there was also an increase in demand for skill. We also show that college openings led to an increase in the productivity of skilled labor and investments in R&D. Our findings are consistent with models of endogenous technical change where an abundance of skilled workers may encourage firms to adopt skill-complementary technologies, leading to an upward-sloping long-run demand for skill.

Suggested Citation

  • Carneiro, Pedro & Liu, Kai & Salvanes, Kjell G., 2018. "The Supply of Skill and Endogenous Technical Change: Evidence From a College Expansion Reform," Discussion Paper Series in Economics 16/2018, Norwegian School of Economics, Department of Economics.
    • Handle: RePEc:hhs:nhheco:2018_016
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    8. Shuaizhang Feng & Xiaoyu Xia, 2018. "Endogenous skill-biased technology adoption: Evidence from China's college enrollment expansion program," Working Papers 2018-099, Human Capital and Economic Opportunity Working Group.
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    10. Schultheiss, Tobias & Pfister, Curdin & Gnehm, Ann-Sophie & Backes-Gellner, Uschi, 2023. "Education expansion and high-skill job opportunities for workers: Does a rising tide lift all boats?," Labour Economics, Elsevier, vol. 82(C).
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    More about this item

    Keywords

    Skilled labor; skilled wages; college expansion reform;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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