Technical Progress and Labour Demand in Swedish Manufacturing Firms

Controlling firms’ sales in the labour demand model, this paper investigateseffects of trade and R&D via technical progress on labour demand in a dynamic framework,based on a panel of Swedish manufacturing firms for 1990s. The main results of this studyindicate that employment elasticities with respect to different characteristics of firms(wages, total sales, exports and R&D efforts) and industrial import penetration could varyacross respective skilled sectors. There is some indication to that import penetration fromfourteen ‘old members’ of European Union could induce capital-saving technical progressand result in the rise in demand for labour for firms in medium-low skilled sector, whilstthose from the ten ‘new members’ of European Union could induce x-efficiency and laboursavingtechnical progress for firms in low-skilled sector. Furthermore, the effects of R&Dintensity on demand for labour are positive and significant for firms in medium-high-skilledand high-skilled sectors.