Technology, knowledge spillovers and changes in employment structure: evidence from six OECD countries

This paper investigates and compares changes in the employment structure in manufacturing in Finland, France, Germany, Japan, the United Kingdom and the United States in the period 1975-1995. Using data on employment by skill level and type and several measures of an industry's technological advancement, we find a positive relationship between skill upgrading and R&D intensity. Since technology has some characteristics of a public good, it is important to include into the analysis spillovers explaining the changes in employment structure. Including knowledge spillovers lowers the estimates for R&D intensity substantially and shows a significant impact of knowledge spillovers on skill upgrading. In addition, splitting the sample into high-tech and low-tech industries reveals that the joint impact of spillovers in explaining skill upgrading in low-tech industries is more important than the impact of R&D itself. Furthermore, using three different definitions of skill, we find different point estimates for the impact of technology variables on skill upgrading. The results reveal that both the development of technology (through R&D) and its application (through spillovers) is skilled-biased, and not just the development as is often assumed in previous work. (C) 2002 Elsevier Science B.V. All rights reserved.