2015/30 | LEM Working Paper Series | ||||||||||||||||
The Dynamics of Skills: Technology and Business Cycles |
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Valeria Cirillo, Mario Pianta, Leopoldo Nascia |
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Keywords | |||||||||||||||||
Skills; Innovation; Technology; Business Cycles
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JEL Classifications | |||||||||||||||||
J23; J24; J21; O3
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Abstract | |||||||||||||||||
This article investigates the role of technology, education and wages
in shaping the skill structure of employment considering the upswings
and downswings of business cycles. We develop an econometric
estimation of these relationships and carry out an empirical test at
the industry level for manufacturing and services for five European
countries (Germany, France, Spain, Italy and United Kingdom) over the
period 1999-2011. For the first time, these relationships are
separately investigated in the specific contexts of the last upswing
of Europe’s business cycle (2002-2007) and of the post-crisis
downswing (2007-2011) in order to assess the impact of cycles on
employment and skill dynamics, and their determinants. Skills are
investigated using ISCO professional groups, with a distinction
between Managers, Clerks, Craft and Manual workers. We show that
patterns of change of such groups are significantly different from
one another and are appropriate to account for the evolution of the
overall skill structure. Results document the role that different
types of technological change, education, wages and demand have on
industries’ job creation, broken down by professional groups. In
manufacturing all professional groups except managers experience job
losses that are mainly driven by the introduction of process
innovation. In services, a polarised employment structure emerges,
mainly driven by the expansion of demand. These relationships,
however, do not always hold. During the downswing most established
links break down; in particular, product innovation loses its
positive impact on jobs while new processes drive the process of
restructuring that is taking place, with diverse effects on each
professional group.
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