Labour Substitution in Construction and the Metal Industry in Denmark
1993 (English)Report (Other academic)
This paper applies the Johansen cointegration technique to investigate the degree of substitutability between skilled and unskilled labour in construction and the metal industry in Denmark. For construction I find a high degree of labour substitutability. Factor prices are weakly exogenous so the results are consistent with the simple neoclassical model. In the metal industry relative employment and factor prices also cointegrate. The substitution elasticity is close to zero and a formal test of this hypothesis shows that it cannot be rejected. If true, this suggests a Leontief production technology or rigid working and contracting practices that prevent an adjustment of relative employment to relative wage changes, or vice versa.
Place, publisher, year, edition, pages
Stockholm: IIES , 1993. , 20 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 535
labour substitution, construction and the metal industry, skilled and unskilled labour, unequal employment performance, declining wage differentials
IdentifiersURN: urn:nbn:se:su:diva-41855OAI: oai:DiVA.org:su-41855DiVA: diva2:337998
Published in connection with a visit at the IIES.2010-08-102010-08-102010-08-10