Equipment Investment and the Relative Demand for Skilled Labor: International Evidence

16 Pages Posted: 20 Apr 2011

See all articles by Karnit Flug

Karnit Flug

Bank of Israel

Zvi Hercowitz

Tel Aviv University - Eitan Berglas School of Economics; National Bureau of Economic Research (NBER)

Date Written: December 1996

Abstract

This paper estimates the effects of equipment investment on relative wages and employment of skilled labor and explores their dynamics. The basic hypothesis is that they are positive, due to either equipment-skill complementarity or to skill advantage in technology adoption. Using a panel data set with a wide rage of countries, the relative wage and relative employment of skilled workers are regressed on lagged investment in machinery and other relevant variables. The results indicate a strong, positive effect of machinery investment on the relative demand for skilled labor.

Suggested Citation

Flug, Karnit and Hercowitz, Zvi, Equipment Investment and the Relative Demand for Skilled Labor: International Evidence (December 1996). IDB Working Paper No. 273, Available at SSRN: https://ssrn.com/abstract=1815960 or http://dx.doi.org/10.2139/ssrn.1815960

Karnit Flug (Contact Author)

Bank of Israel ( email )

P.O. Box 780
Jerusalem, 91907
Israel

Zvi Hercowitz

Tel Aviv University - Eitan Berglas School of Economics ( email )

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel
+972 3 640 9916 (Phone)
+972 3 640 9908 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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