DP1279 Skill Demand and Factor Substitution

Author(s): Fatemeh Shadman-Mehta, Henri Sneessens
Publication Date: November 1995
Keyword(s): Exdogenous Technical Progress, Shephard's Lemma, Skill Mismatch
JEL(s): E24, J23
Programme Areas: Human Resources
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1279

The aim of this paper is to empirically evaluate the relative importance of the various factors likely to have influenced the demand for skilled and unskilled labour in France, over the period 1962-89. Our approach is macroeconomic, and we essentially deal with technology choice, that is factor productivity over the long run. We estimate a system of three equations, with a dynamic formulation of the error correction type. The main aim is to estimate price elasticities, and direct and cross partial elasticities of substitution between different factors, especially those related to skilled and unskilled labour.