Explaining the Occupational Structure of Dutch Sectors of Industry, 1988-2003

We develop a new model to explain the occupational structure of Dutchsectors of industry. The non-homothetic production function we use takesaccount of capital-skill complementarities, skill-biased technological changeand the interaction between labour demand and supply.We estimate the structural parameters of the model for the periodbetween 1988 and 2003 using system dynamic OLS techniques to accountfor the employment dynamic dependence across occupations and sectors ofindustry. The employment series by occupation and sector have both a longrun and a short-run relationship with value added, capital and R&D. Theshort run dynamics can further be decomposed into intra and intersectoraldynamics.We find that both the long run and short run relationships explaina significant part of employment by occupation and sector of industry.Moreover, employment by occupation and sector is significantly affectedby both the intra- and intersectoral dynamics.JEL Classification: J21, J23.Keywords: Labour demand, Occupational structure, Skill-biased technologicalchange, Capital-skill complementarity.