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Capital-Skill Complementarity and Inequality in Sweden

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Author Info
Matthew J. Lindquist

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Abstract

Income inequality increased in Sweden during the 1980s and 1990s, as did the returns to higher education. The main conclusion of this study is that increased income inequality between high- and low-skilled workers is demand driven and is due to the presence of capital-skill complementarity in production. Increased investments in new, more efficient capital equipment, along with a slowdown in the growth rate of skilled labor, have raised the ratio of effective capital inputs per skilled worker, which, in turn, has increased the relative demand (and market return) for skilled labor through the capital-skill complementarity mechanism. Copyright The editors of the "Scandinavian Journal of Economics", 2005 .

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-9442.2005.00425.x
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Publisher Info
Article provided by Blackwell Publishing in its journal The Scandinavian Journal of Economics.

Volume (Year): 107 (2005)
Issue (Month): 4 (December)
Pages: 711-735
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Handle: RePEc:bla:scandj:v:107:y:2005:i:4:p:711-735

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Lindquist, Matthew J., 2002. "Capital-Skill Complementarity and Inequality Over the Business Cycle," Research Papers in Economics 2002:14, Stockholm University, Department of Economics, revised 01 Sep 2003.
    Other versions:
  2. Lindquist, Matthew, 2001. "Capital-Skill Complementarity and Inequality in Swedish Industry," Research Papers in Economics 2001:2, Stockholm University, Department of Economics, revised 05 Mar 2003. [Downloadable!]
  3. Hibbs, Douglas Jr. & Locking, Hakan, 1996. "Wage compression, wage drift and wage inflation in Sweden," Labour Economics, Elsevier, vol. 3(2), pages 109-141, September. [Downloadable!] (restricted)
  4. Per-Anders Edin & Bertil Holmlund, 1995. "The Swedish Wage Structure: The Rise and Fall of Solidarity Wage Policy?," NBER Chapters, in: Differences and Changes in Wage Structures, pages 307-344 National Bureau of Economic Research, Inc. [Downloadable!]
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  5. Griliches, Zvi, 1969. "Capital-Skill Complementarity," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 465-68, November. [Downloadable!] (restricted)
  6. Nickell, Stephen & Bell, Brian, 1995. "The Collapse in Demand for the Unskilled and Unemployment across the OECD," Oxford Review of Economic Policy, Oxford University Press, vol. 11(1), pages 40-62, Spring.
  7. Roberto A. De Santis, 2003. "Wage Inequality in the United Kingdom: Trade and/or Technology?," The World Economy, Blackwell Publishing, vol. 26(6), pages 893-909, 06. [Downloadable!] (restricted)
  8. Laroque, Guy & Salanie, Bernard, 1989. "Estimation of Multi-market Fix-Price Models: An Application of Pseudo Maximum Likelihood Methods," Econometrica, Econometric Society, vol. 57(4), pages 831-60, July. [Downloadable!] (restricted)
  9. De Santis, Roberto A., 2002. "Wage inequality between and within groups: trade-induced or skill-bias technical change? Alternative age models for the UK," Economic Modelling, Elsevier, vol. 19(5), pages 725-746, November. [Downloadable!] (restricted)
  10. Mellander, Erik, 1999. "The multi-dimensional nature of labor demand and skill-biased technical change," Working Paper Series 1999:9, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  11. Francesco Caselli, 1999. "Technological Revolutions," American Economic Review, American Economic Association, vol. 89(1), pages 78-102, March. [Downloadable!] (restricted)
  12. Stephen Machin & John Van Reenen, 1998. "Technology And Changes In Skill Structure: Evidence From Seven Oecd Countries," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1215-1244, November. [Downloadable!] (restricted)
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  13. Per Krusell & Lee E. Ohanian & JosÈ-Victor RÌos-Rull & Giovanni L. Violante, 2000. "Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis," Econometrica, Econometric Society, vol. 68(5), pages 1029-1054, September.
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  14. Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 1997. "Long-Run Implications of Investment-Specific Technological Change," American Economic Review, American Economic Association, vol. 87(3), pages 342-62, June. [Downloadable!] (restricted)
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  15. Robert Anderton & Paul Brenton & Eva Oscarsson, 2002. "What’s trade got to do with it? Relative demand for skills within Swedish manufacturing," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(4), pages 629-651, December. [Downloadable!] (restricted)
  16. Flam, Harry, 1987. " Equal Pay for Unequal Work," Scandinavian Journal of Economics, Blackwell Publishing, vol. 89(4), pages 435-50.
  17. Gustavsson, Magnus, 2004. "Changes in Educational Wage Premiums in Sweden: 1992-2001," Working Paper Series 2004:10, Uppsala University, Department of Economics.
  18. Mellander, Erik, 1999. "The Multi-Dimensional Nature of Labor Demand and Skill-Biased Technical Change," Working Paper Series 518, Research Institute of Industrial Economics, revised 08 Dec 1999. [Downloadable!]
  19. Matthew J. Lindquist, 2000. "Wage Compression and Welfare in Sweden," Econometric Society World Congress 2000 Contributed Papers 0418, Econometric Society.
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  20. Bergstrom, Villy & Panas, Epaminondas E, 1992. "How Robust Is the Capital-Skill Complementarity Hypothesis?," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 540-46, August. [Downloadable!] (restricted)
  21. Fredriksson, Peter, 1997. " Economic Incentives and the Demand for Higher Education," Scandinavian Journal of Economics, Blackwell Publishing, vol. 99(1), pages 129-42, March. [Downloadable!] (restricted)
  22. Hansson, Par, 2000. "Relative Demand for Skills in Swedish Manufacturing: Technology or Trade?," Review of International Economics, Blackwell Publishing, vol. 8(3), pages 533-55, August. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Magnus Gustavsson, 2006. "The evolution of the Swedish wage structure: new evidence for 1992--2001," Applied Economics Letters, Taylor and Francis Journals, vol. 13(5), pages 279-286, April. [Downloadable!] (restricted)
  2. Peter Birch Sørensen, 2006. "Can Capital Income Taxes Survive? And Should They?," EPRU Working Paper Series 06-06, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics. [Downloadable!]
  3. Magnus Gustavsson, 2007. "The 1990s rise in Swedish earnings inequality -- persistent or transitory?," Applied Economics, Taylor and Francis Journals, vol. 39(1), pages 25-30, January. [Downloadable!] (restricted)
  4. Lilia Maliar & Serguei Maliar, 2006. "Capital-Skill Complementarity And Steady-State Growth," Working Papers. Serie AD 2006-15, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
  5. Manoj Atolia & Yoshinori Kurokawa, 2008. "Variety Trade and Skill Premium in a Calibrated General Equilibrium Model: The Case of Mexico," Working Papers wp2008_11_03, Department of Economics, Florida State University. [Downloadable!]
    Other versions:
  6. Matthew J. Lindquist, 2004. "Capital-Skill Complementarity and Inequality Over the Business Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(3), pages 519-540, July. [Downloadable!] (restricted)
    Other versions:
  7. Peter Birch Sørensen, 2006. "Can Capital Income Taxes Survive? And Should They?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  8. Catia Batista, 2007. "Joining the EU: Capital Flows, Migration and Wages," Economics Series Working Papers 342, University of Oxford, Department of Economics. [Downloadable!]
  9. Domeij, David & Ljungqvist, Lars, 2006. "Wage Structure and Public Sector Employment: Sweden versus the United States 1970-2002," CEPR Discussion Papers 5921, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
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This page was last updated on 2009-10-26.


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