Capital-Skill Complementarity and Rigid Relative Wages


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Capital-Skill Complementarity and Rigid Relative Wages

Vis færre oplysninger Rose Skaksen, Jan en_US Sørensen, Anders en_US 2009-02-04T10:27:40Z 2009-02-04T10:27:40Z 2004-12-09T00:00:00Z en_US
dc.description.abstract The relative demand for skills has increased considerably in many OECD countries during recent decades. This development is potentially explained by capital-skill complementarity and high growth rates of capital equipment. When production functions are characterized by capital-skill complementarity, relative wages and employment of skilled labor are countercyclical because capital equipment is a quasi- fixed factor in the short run. The exact behavior of the two variables depends on relative wage flexibility. Relative wages are rigid in Denmark, implying that the employment share of skills should be countercyclical. The labor market is competitive in the United States and therefore relative wages of skilled labor are expected to be countercyclical. We find that the business cycle development of the two economies is consistent with capital-skill complementarity. Keywords: capital-skill complementarity, relative wages, business cycle en_US
dc.format.extent 30 s. en_US
dc.language eng en_US
dc.relation.ispartofseries Working paper;2004-010 en_US
dc.subject.other kep en_US
dc.title Capital-Skill Complementarity and Rigid Relative Wages en_US
dc.type wp en_US
dc.accessionstatus modt04dec09 miel en_US
dc.contributor.corporation Copenhagen Business School. CBS en_US
dc.contributor.department Økonomisk Institut en_US
dc.contributor.departmentshort ECON en_US
dc.contributor.departmentuk Department of Economics en_US
dc.contributor.departmentukshort ECON en_US
dc.idnumber x656444583 en_US København en_US
dc.publisher.year 2004 en_US
dc.title.subtitle Inference from the Business Cycle en_US

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