Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/20829 
Year of Publication: 
2003
Series/Report no.: 
IZA Discussion Papers No. 664
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Relative wages have been remarkably rigid for the last two decades in Danish manufacturing despite large shifts in relative employment from unskilled labor towards skilled and educated labor. Assuming capital-skill complementarity and fixed relative wages as a consequence of labor market institutions, we argue that skill upgrading is more pronounced during downturns than upturns. This prediction is supported by a high positive and significant correlation between changes in relative employment of skilled labor and changes in the unemployment rate. Furthermore, we show that international outsourcing has played an important role in explaining the shift in relative labor demand.
Subjects: 
rigid relative wages
skill upgrading
business cycle
outsourcing
skill biased technological changes
JEL: 
O39
F02
E32
J51
J31
Document Type: 
Working Paper

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