HOW ROBUST IS THE CAPITAL SKILL COMPLEMENTARITY HYPOTHESIS

This paper investigates the relation between substitution possibilities in manufacturing production between capital and two labor inputs, blue collar and white collar workers. Griliches found in 1969 that unskilled labor was more easily substituted for by capital than skilled labor. Griliches called this capital skill complementarity (CSC). The CSC hypothesis has implication for the aggregation of labor inputs as well as for employment of labor categories and income distribution between factors. This paper investigates the robustness of the CSC hypothesis on Swedish data by varying model assumptions concerning economies of scale and technological growth.