Skill Demand and Factor Substitution

The aim of this paper is to empirically evaluate the relative importance of the various factors likely to have influenced the demand for skilled and unskilled labour in France, over the period 1962-89. Our approach is macroeconomic, and we essentially deal with technology choice, that is factor productivity over the long run. We estimate a system of three equations, with a dynamic formulation of the error correction type. The main aim is to estimate price elasticities, and direct and cross partial elasticities of substitution between different factors, especially those related to skilled and unskilled labour.