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Skill Upgrading and Rigid Relative Wages: The Case of Danish Manufacturing

Author

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  • Skaksen, Jan Rose

    (Rockwool Foundation Research Unit)

  • Sorensen, Anders

    (CEBR, Copenhagen)

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.

Suggested Citation

  • Skaksen, Jan Rose & Sorensen, Anders, 2002. "Skill Upgrading and Rigid Relative Wages: The Case of Danish Manufacturing," IZA Discussion Papers 664, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp664
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    References listed on IDEAS

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    Cited by:

    1. Yamashita, Nobuaki, 2008. "The impact of production fragmentation on skill upgrading: New evidence from Japanese manufacturing," Journal of the Japanese and International Economies, Elsevier, vol. 22(4), pages 545-565, December.
    2. Malchow-Møller, Nikolaj & Skaksen, Jan Rose, 2003. "Skill-Biased Technological Change in Denmark: A Disaggregate Perspective," IZA Discussion Papers 752, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    rigid relative wages; skill upgrading; business cycle; outsourcing; skill biased technological changes;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • O39 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Other

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