Karnit Flug

Equipment Investment and the Relative Demand for Skilled Labor: International Evidence

This paper estimates the effects of equipment investment on relative wages and employment of skilled labor and explores their dynamics. The basic hypothesis is that they are positive, due to either equipment-skill complementarity or to skill advantage in technology adoption. Using a panel data set with a wide rage of countries, the relative wage and relative employment of skilled workers are regressed on lagged investment in machinery and other relevant variables. The results indicate a strong, positive effect of machinery investment on the relative demand for skilled labor.

Short-Run Absorption of the Ex-USSR Immigrants in Israel’s Labor Market

The economic literature on the absorption of immigrants in the labor market of the destination country has concentrated on the performance of their wages relative to that of the native population and over time (Borjas, 1985, Chiswick, 1978, LaLonde and Topel, 1992). Relatively few studies have dealt directly with the question of the preservation and transferability of immigrants’ human capital. One such study is that of Friedberg (1991), which measures the transferability of schooling in the country of origin by measuring its effect on earnings in the destination country. Another is that of Ofer, Vinkoor and Ariav (1983), which studied the by-occupation absorption pattern and compared the earnings of those who retained and those who changed their occupation. Another direction of research is that of Beenstock (1993) and Chiswick (1992), which concentrated on language acquisition (as a complementary skill) and its effect on labor-market absorption (probability of finding a job and its quality). Other studies have shown that occupational convergence takes place over time: these include Chiswick (1977) for immigrants to the US, and Amir (1993) for highly educated immigrants from the Former Soviet Union (FSU) to Israel during the 1970s.

Persistent Growth Episodes and Macroeconomic Policy Performance in Israel

This paper presents an analysis of persistent growth episodes in Israel during the years 1961-2008. The analysis uses, in addition to the standard variables, a new index of the quality of macroeconomic management. The quality of macroeconomic management turns out to have a significant impact on growth episodes. However, our quantitative analysis shows that exogenous variables like world trade and security events had a larger impact on persistent growth episodes than did the policy variables. In contrast to previous studies about growth in Israel, that emphasized the role of supply factors as crucial for explaining growth, we found that these factors are insufficient to explain persistent growth episodes in Israel; demand variables provide a similar explanatory contribution.