Employment Occupational Structure, Technological Capital and Reorganization of Production

Abstract

This paper analyzes the role of skill-biased technological progress on the recent changes in the occupational structure of Spanish manufacturing employment. Our dataset consists of a panel of Spanish manufacturing firms during the period 1986-1991. We confirm a puzzle that has been found in other OECD countries: investment in capital inputs is clearly procyclical, but destruction of unskilled jobs and creation of skilled jobs have been concentrated during the recession. However, we also find that the number of firms investing by first time in technological capital has been clearly countercyclical. Based on this evidence, we estimate a dynamic model where firms take discrete decisions about what labor and capital inputs to use, and continuous decisions on the amount of each selected input. After controlling for individual heterogeneity and self-selection we find that these two decisions have different effects on occupational structure. In particular, we find that for new innovative firms the introduction of technological capital has significant and sizeable effects on the occupational structure of employment.

JEL Classification: C33, J21, J44, L23