Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 1999:9: The multi-dimensional nature of labor demand and skill-biased technical change

Erik Mellander ()
Additional contact information
Erik Mellander: IFAU - Office of Labour Market Policy Evaluation, Postal: Labour Market Policy Evaluation, P O Box 513, SE-751 20 Uppsala, Sweden

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.

Keywords: Robustness test; Labor quality; Heterogenous low-skilled; Manufacturing application

JEL-codes: D21; J23; J31; L60; O33

64 pages, December 8, 1999

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