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Innovations, Wages and Demand for Heterogeneous Labour: New Evidence from a Matched Employer-Employee Data-Set

  • Bellmann, Lutz


    (Institute for Employment Research (IAB), Nuremberg)

  • Schank, Thorsten


    (University of Mainz)

This paper examines the impact of innovations and wages on the demand for heterogeneous labour. Based on matched data from the IAB-establishment panel survey and the files of the employment statistics register for the year 1995, input shares derived from a generalised Leontief cost function are estimated for six qualification groups (blue and white collar workers stratified into unskilled, skilled and highly-skilled employees) in the West German production industries. With the exception of highly skilled blue collar workers, innovations have a positive and significant effect on labour demand for all groups, with an estimated relative change of the conditional labour demand ranging between 3.2% and 6.3%. Between white collar workers as well as between unskilled and skilled blue collar workers, we find an increasing positive impact of innovations on labour demand with qualification level. Skilled and highly skilled employees are found to be substitutes for the unskilled. This result implies that more flexible wages of the unskilled would reduce the unemployment of this group. Finally, our data is not consistent with separability of blue-collar employees from white collar employees, there is weak evidence that skilled and highly skilled blue collar employees can be aggregated.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 112.

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Length: 27 pages
Date of creation: Feb 2000
Date of revision:
Handle: RePEc:iza:izadps:dp112
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  1. Diewert, W E, 1971. "An Application of the Shephard Duality Theorem: A Generalized Leontief Production Function," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 481-507, May-June.
  2. Blechinger, Doris & Kleinknecht, Alfred & Licht, Georg & Pfeiffer, Friedhelm, 1998. "The impact of innovation on employment in Europe: An analysis using CIS data," ZEW Dokumentationen 98-02, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Denny, Michael & Fuss, Melvyn A, 1977. "The Use of Approximation Analysis to Test for Separability and the Existence of Consistent Aggregates," American Economic Review, American Economic Association, vol. 67(3), pages 404-18, June.
  4. Blackorby, Charles & Primont, Daniel & Russell, R. Robert, 1977. "On testing separability restrictions with flexible functional forms," Journal of Econometrics, Elsevier, vol. 5(2), pages 195-209, March.
  5. Abowd, John M. & Kramarz, Francis, 1999. "The analysis of labor markets using matched employer-employee data," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 40, pages 2629-2710 Elsevier.
  6. Sunde, Uwe & Thalmaier, Anja & Zimmermann, Klaus F., 1999. "Arbeitsplätze für Geringqualifizierte," Munich Reprints in Economics 19582, University of Munich, Department of Economics.
  7. W. Erwin Diewert & T.J. Wales, 1989. "Flexible Functional Forms and Global Curvature Conditions," NBER Technical Working Papers 0040, National Bureau of Economic Research, Inc.
  8. Riphahn, Regina T. & Thalmaier, Anja & Zimmermann, Klaus F., 1999. "Report No. 2: Schaffung von Arbeitsplätzen für Geringqualifizierte," IZA Research Reports 2, Institute for the Study of Labor (IZA).
  9. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
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