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Estimating the Demand for Skilled Labour, Unskilled Labour and Clerical Workers: A Dynamic Framework

Author

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  • Ide Kearney

    (Economic and Social Research Institute (ESRI))

Abstract
We estimate long-run interrelated demand functions for skilled labour, unskilled labour, clerical labour and capital services within dynamic framework using a panel of data on Irish manufacturing sectors during the 1980s. We group the sectors into three production ?types? ? high-growth sectors, medium-growth sectors and declining sectors. The results indicate very important differences in the demand for skilled labour compared to the demand for unskilled labour and in the underlying production technologies for the three groups of sectors. The medium-growth group of sectors are characterised by a stable production technology where skilled labour, unskilled labour and capital are all limited substitutes in production and there is little evidence of skill-biased technical change or trade effects. Most of the relatively minor shifts in factor shares in this group are accounted for by movements in relative factor prices. This group numbered over half of all manufacturing employment throughout the period under study. The high-growth group of sectors has all the features of the production technology described in modern growth theory: skilled labour and capital are complements in production, technical progress is biased against unskilled labour and the skill-intensity of production is increasing over time. This favours the 'skill-biased technical change' hypothesis. And the declining group of sectors are in secular decline with no stable long-run demand for labour. This would favour the ?trade effect? hypothesis where low-skill technologies are relocating form Ireland to low-large countries because of import penetration.

Suggested Citation

  • Ide Kearney, 1997. "Estimating the Demand for Skilled Labour, Unskilled Labour and Clerical Workers: A Dynamic Framework," Papers WP091, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esr:wpaper:wp091
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    File URL: https://www.esri.ie/pubs/WP091.pdf
    File Function: First version, 1997
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    Citations

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    Cited by:

    1. Ludo Cuyvers & Emmanuel Dhyne & Reth Soeng, 2010. "The effects of internationalisation on domestic labour demand by skills : Firm-level evidence for Belgium," Working Paper Research 206, National Bank of Belgium.
    2. Tomas Havranek & Zuzana Irsova & Lubica Laslopova & Olesia Zeynalova, 2020. "Skilled and Unskilled Labor Are Less Substitutable than Commonly Thought," Working Papers IES 2020/29, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Sep 2020.
    3. Barrett, Alan & FitzGerald, John & Nolan, Brian, 2002. "Earnings inequality, returns to education and immigration into Ireland," Labour Economics, Elsevier, vol. 9(5), pages 665-680, November.
    4. John FitzGerald & Ide Kearney, 1999. "Migration and the Irish Labour Market," Papers WP113, Economic and Social Research Institute (ESRI).
    5. John FitzGerald & Ide Kearney, 2000. "Convergence in Living Standards in Ireland: The Role of the New Economy," Papers WP134, Economic and Social Research Institute (ESRI).
    6. John Fitzgerald, 2011. "Investment in Education and Economic Growth on the Island of Ireland," Trinity Economics Papers tep0719, Trinity College Dublin, Department of Economics.

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