A closer look at the skilled labor demand increase in Brazil

Paulo de Andrade Jacinto, Eduardo Ribeiro and Túlio Cravo

Journal of Economic Studies, 2017, vol. 44, issue 2, 294-312

Abstract: Purpose - The purpose of this paper is to evaluate skilled labor demand determinants in Brazil, considering alternatives explanations: changes in relative wages, non-homothetic technology output growth and skill-biased technical change. Design/methodology/approach - This study relies on a rich and unique matched employer-employee data set for manufacturing sector, from 1996 to 2003. The analysis considers a translog functional form labor demand system estimated using seemingly unrelated regression and instrumental variables to control for possible measurement errors and wages and output endogeneity. Findings - The demand function estimates suggest that: labor demand underlying technology is non-homothetic, research and development investment is biased toward skilled workers, the non-homothetic technology is not skill biased so output changes contributed positively for skilled labor increase, relative wages played a significant role and international trade has little explanatory power explaining labor demand shifts. Originality/value - This is the first paper that considers alternative explanations for the increase in the demand of skilled workers for manufacturing in Brazil simultaneously: changes in relative wages, output changes with non-homothetic technology, skill-biased technical change and, to a lesser extent, international trade. The study challenges current empirical evidence that considers trade and trade liberalization as the main factor explaining labor demand shifts.

Keywords: R&D expenditures; Technical change; Homothetic technology; Skilled labour; J24; O15 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jespps:jes-08-2014-0146

DOI: 10.1108/JES-08-2014-0146

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