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The Supply of Skill and Endogenous Technical Change: Evidence From a College Expansion Reform

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  • Salvanes, Kjell G
  • Carneiro, Pedro
  • Liu, Kai
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 find 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 firms to adopt skill-complementary technologies, leading to an upward-sloping long-run demand for skill.

Suggested Citation

  • Salvanes, Kjell G & Carneiro, Pedro & Liu, Kai, 2018. "The Supply of Skill and Endogenous Technical Change: Evidence From a College Expansion Reform," CEPR Discussion Papers 13045, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13045
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    3. Li Dai & Pedro S. Martins, 2020. "Does vocational education pay off in China? Instrumental-variable quantile-regression evidence," Working Papers 100, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    4. John Van Reenen, 2022. "Innovation and Human Capital Policy," NBER Chapters, in: Innovation and Public Policy, pages 61-83, National Bureau of Economic Research, Inc.
    5. 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).
    6. 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).
    7. Downey, Mitch, 2021. "Partial automation and the technology-enabled deskilling of routine jobs," Labour Economics, Elsevier, vol. 69(C).
    8. 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).
    9. Lee, Jongkwan, 2021. "The Role of a University in Cluster Formation: Evidence from a National Institute of Science and Technology in Korea," Regional Science and Urban Economics, Elsevier, vol. 86(C).
    10. 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).
    11. 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.
    12. 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.
    13. 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.
    14. 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.
    15. Wenchao Jin, 2022. "Occupational polarisation and endogenous task-biased technical change," Working Paper Series 0622, Department of Economics, University of Sussex Business School.
    16. Barbara Boelmann, 2024. "Women’s Missing Mobility and the Gender Gap in Higher Education: Evidence from Germany’s University Expansion," ECONtribute Discussion Papers Series 280, University of Bonn and University of Cologne, Germany.
    17. 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.

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    More about this item

    Keywords

    Endogenous technical change; College reform; Supply of skills;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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