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

Author

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  • Pedro Carneiro

    (University College London)

  • Kai Liu

    (University of Cambridge)

  • Kjell Salvanes

    (Norges Handelshøyskole)

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

  • Pedro Carneiro & Kai Liu & Kjell Salvanes, 2018. "The Supply of Skill and Endogenous Technical Change: Evidence From a College Expansion Reform," Working Papers 2018-041, Human Capital and Economic Opportunity Working Group.
    • Handle: RePEc:hka:wpaper:2018-041
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    10. Martins, Pedro S., 2021. "Which Occupations Do Jobseekers and Firms Look For? Evidence from Three Public Employment Services," GLO Discussion Paper Series 971, Global Labor Organization (GLO).
    11. Tora K. Knutsen & Jørgen Modalsli & Marte Rønning, 2020. "Distance and choice of field. Evidence from a Norwegian college expansion reform," Discussion Papers 932, Statistics Norway, Research Department.
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    More about this item

    Keywords

    labor market outcomes; returns to skill; technical change;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O00 - Economic Development, Innovation, Technological Change, and Growth - - General - - - General

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