Research Papers in Economics,
Stockholm University, Department of Economics

Abstract: This paper proposes a new reason for why the relative demand for skilled workers has increased over past decades. I suggest that increases in market concentration and the rise of superstar firms may be important causes for the rise in demand for skill. I use detailed employer-employee data for the Swedish manufacturing sector between 1997 and 2014 to validate my hypothesis. My analysis demonstrates a strong correlation between firm size and the skilled share of a firm’s worker mix. The slope of this relationship is at its steepest in the right tail of the size distribution. I also, as Autor et al. (2017b), find a substantial rise in market concentration in Swedish manufacturing, both in the aggregate and across sub-sectors. The rise in market concentration is strongly correlated with a rise in the relative usage of skilled workers. Furthermore, a majority of the change in skill usage is due to between-firm variation, a reallocation of production across firms. This supports the notion that market concentration, rather than a general skill upgrading across all firms, has caused the rise in skill demand. Finally, the reallocation of production was most pronounced in industries characterized by large increases in market concentration. I estimate that about a tenth of the rise in the usage of skilled labor in Swedish manufacturing is due to the increasing importance of the largest firms.

Keywords: Relative Skill Demand; Skill Premium; Market Concentration; Superstar Firms

JEL-codes: D22; D33; D43; J24; J31; L13; L40

43 pages, July 31, 2018

Full text files

wp18_02.pdf  Full text

Download statistics

• Stockholm University, Department of Economics
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Anne Jensen ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2024-02-05 17:13:48.