The Demand for Human Capital: A Microeconomic Approach
December 2001
Working Paper Number:
CES-01-16
Abstract
We propose a model for explaining the demand for human capital based on a CES production function with human capital as an explicit argument in the function. The resulting factor demand model is tested with data on roughly 6,000 plants from the Census Bureau's Longitudinal Research Database. The results show strong complementarity between physical and human capital. Moreover, the complementarity is greater in high than in low technology industries. The results also show that physical capital of more recent vintage is associated with a higher demand for human capital. While the age of a plant as a reflection of learning-by-doing is positively related to the accumulation of human capital, this relation is more pronounced in low technology industries.
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:
production,
macroeconomic,
endogeneity,
manufacturing,
technological,
employee,
organizational,
employ,
employed,
labor productivity,
labor,
specialization,
capital,
gdp,
wage variation,
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Standard Industrial Classification,
Longitudinal Research Database,
Center for Economic Studies,
National Bureau of Economic Research,
Census Bureau Longitudinal Business Database,
1940 Census
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