Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 518: The Multi-Dimensional Nature of Labor Demand and Skill-Biased Technical Change

Erik Mellander ()
Additional contact information
Erik Mellander: The Research Institute of Industrial Economics, Postal: IUI, P O Box 5501, SE-114 85 Stockholm, 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; Heterogeneous Low-Skilled; Manufacturing Application

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

64 pages, First version: August 19, 1999. Revised: December 8, 1999.

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