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Capital-Skill Complementarity and Inequality in Sweden

  • Lindquist, Matthew J.


    (Swedish Institute for Social Research, Stockholm University)

Income inequality increased in Sweden during the 1980’s and 90’s as did the returns to higher education. The main conclusion of this study is that increased income inequality between high and low skilled workers is demand driven and is due to the presence of capital-skill complementarity in production. Increased investments in new, more efficient capital equipment, together with a slowdown in the growth rate of skilled labor, have raised the ratio of effective capital inputs per skilled worker, which, in turn, has increased the relative demand (and market return) for skilled labor through the capital-skill complementarity mechanism.

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Paper provided by Swedish Institute for Social Research in its series Working Paper Series with number 2/2005.

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Length: 30 pages
Date of creation: 08 Feb 2005
Date of revision:
Handle: RePEc:hhs:sofiwp:2005_002
Contact details of provider: Postal: SOFI, Stockholm University, SE-10691 Stockholm, Sweden
Phone: (0)8 - 16 32 48
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  1. repec:ucp:bknber:9780226304557 is not listed on IDEAS
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  8. Per-Anders Edin & Bertil Holmlund, 1995. "The Swedish Wage Structure: The Rise and Fall of Solidarity Wage Policy?," NBER Chapters, in: Differences and Changes in Wage Structures, pages 307-344 National Bureau of Economic Research, Inc.
  9. De Santis, Roberto A., 2002. "Wage inequality between and within groups: trade-induced or skill-bias technical change? Alternative age models for the UK," Economic Modelling, Elsevier, vol. 19(5), pages 725-746, November.
  10. Hansson, Pär, 1999. "Relative Demand for Skills in Swedish Manufacturing: Technology or Trade?," Working Paper Series 152, Trade Union Institute for Economic Research.
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  13. Robert Anderton & Paul Brenton & Eva Oscarsson, 2002. "What’s trade got to do with it? Relative demand for skills within Swedish manufacturing," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(4), pages 629-651, December.
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  16. Flam, Harry, 1987. " Equal Pay for Unequal Work," Scandinavian Journal of Economics, Wiley Blackwell, vol. 89(4), pages 435-50.
  17. Matthew J. Lindquist, 2004. "Capital-Skill Complementarity and Inequality Over the Business Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(3), pages 519-540, July.
  18. Nickell, Stephen & Bell, Brian, 1995. "The Collapse in Demand for the Unskilled and Unemployment across the OECD," Oxford Review of Economic Policy, Oxford University Press, vol. 11(1), pages 40-62, Spring.
  19. Lindquist, Matthew J., 2000. "Wage Compression and Welfare in Sweden," Research Papers in Economics 2000:4, Stockholm University, Department of Economics.
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  24. Lindquist, Matthew, 2001. "Capital-Skill Complementarity and Inequality in Swedish Industry," Research Papers in Economics 2001:2, Stockholm University, Department of Economics, revised 05 Mar 2003.
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