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The supply of skill and endogenous technical change: evidence from a college expansion reform

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  • Pedro Carneiro

    (Institute for Fiscal Studies and University College London)

  • Kai Liu

    (Institute for Fiscal Studies)

  • Kjell G. Salvanes

    (Institute for Fiscal Studies and Norwegian School of Economics)

Abstract

We examine the labor market consequences of an exogenous increase in the supply of skilled labor in several cities in Norway, resulting from the construction of new colleges in the 1970s. We fi nd that skilled wages increased as a response, suggesting that along with an increase in the supply there was also an increase in demand for skill. We also show that college openings led to an increase in the productivity of skilled labor and investments in R&D. Our findings are consistent with models of endogenous technical change where an abundance of skilled workers may encourage fi rms to adopt skill-complementary technologies, leading to an upward-sloping long-run demand for skill.

Suggested Citation

  • Pedro Carneiro & Kai Liu & Kjell G. Salvanes, 2018. "The supply of skill and endogenous technical change: evidence from a college expansion reform," CeMMAP working papers CWP42/18, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:cemmap:42/18
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    3. Jung, Yeonha, 2020. "The long reach of cotton in the US South: Tenant farming, mechanization, and low-skill manufacturing," Journal of Development Economics, Elsevier, vol. 143(C).
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    5. Martins, Pedro S., 2021. "Which Occupations Do Jobseekers and Firms Look For? Evidence from Three Public Employment Services," GLO Discussion Paper Series 971, Global Labor Organization (GLO).
    6. Andreas Teichgraeber & John Van Reenen, 2022. "A policy toolkit to increase research and innovation in the European Union," POID Working Papers 025, Centre for Economic Performance, LSE.
    7. Dai, Li & Martins, Pedro S., 2020. "Does vocational education pay off in China? Instrumental-variable quantile-regression evidence," GLO Discussion Paper Series 495, Global Labor Organization (GLO).
    8. Mr. Alberto Behar, 2023. "The Elasticity of Substitution Between Skilled and Unskilled Labor in Developing Countries: A Directed Technical Change Perspective," IMF Working Papers 2023/165, International Monetary Fund.
    9. Shuaizhang Feng & Xiaoyu Xia, 2018. "Endogenous skill-biased technology adoption: Evidence from China's college enrollment expansion program," Working Papers 2018-099, Human Capital and Economic Opportunity Working Group.
    10. Feng, Shuaizhang & Xia, Xiaoyu, 2022. "Heterogeneous firm responses to increases in high-skilled workers: Evidence from China's college enrollment expansion," China Economic Review, Elsevier, vol. 73(C).
    11. Schultheiss, Tobias & Pfister, Curdin & Gnehm, Ann-Sophie & Backes-Gellner, Uschi, 2023. "Education expansion and high-skill job opportunities for workers: Does a rising tide lift all boats?," Labour Economics, Elsevier, vol. 82(C).
    12. Downey, Mitch, 2021. "Partial automation and the technology-enabled deskilling of routine jobs," Labour Economics, Elsevier, vol. 69(C).
    13. Tora K. Knutsen & Jørgen Modalsli & Marte Rønning, 2020. "Distance and choice of field. Evidence from a Norwegian college expansion reform," Discussion Papers 932, Statistics Norway, Research Department.
    14. Antonio Di Paolo & Khalifany-Ash Shidiqi, 2024. "“Education and Ethnic Intermarriage: Evidence from Higher Education Expansion in Indonesia”," AQR Working Papers 202403, University of Barcelona, Regional Quantitative Analysis Group, revised May 2024.
    15. Tianyuan Luo & Genti Kostandini, 2022. "Stringent immigration enforcement and responses of the immigrant‐intensive sector: Evidence from E‐Verify adoption in Arizona," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(4), pages 1411-1434, August.
    16. Wenchao Jin, 2022. "Occupational polarisation and endogenous task-biased technical change," Working Paper Series 0622, Department of Economics, University of Sussex Business School.
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    More about this item

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O00 - Economic Development, Innovation, Technological Change, and Growth - - General - - - General

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