Occupational Labour Demand and the Sources of Non‐neutral Technical Change*

Wing Chan () and Daniel Rich ()

Oxford Bulletin of Economics and Statistics, 2006, vol. 68, issue 1, 23-43

Abstract: This article introduces a two‐step empirical approach for examining both the nature and sources of non‐neutral technical change across multiple occupations. First, conventional labour‐demand parameter estimates and unbiased tests for neutrality are obtained in the context of a flexible cost system. The resulting input‐specific indices of technical change, unconstrained with respect to time path, facilitate subsequent evaluation of proposed sources. In our application to employment decisions of airline firms, we find labour‐saving technical change that is non‐neutral across occupations. We also document occupation‐specific responses to aircraft technology adoption, route system developments and an unprecedented range of technical change elements. Would it not be sensible to start by trying to identify the form which the growth of conventional input efficiency has taken and then proceed to tackle the intriguing, but quite distinct, question of the sources of such growth? As it is now, the typical modus operandi implicitly involves an effort to dispose of both issues by a single stroke. David and van de Klundert (1965)

Date: 2006
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