Denny, Michael, and Melvyn Fuss. 1983. "The Effect of Factor Prices and Technological Change on the Occupational Demand for Labor: Evidence from Canadian Telecommunications." Journal of Human Resources 18(2):161-176.

This paper investigates the effect of automation on the occupational demand for labor using modern econometric demand theory. We are able to estimate labor demand functions derived from a production process characterized by variable elasticities of substitution, nonhomothetic output expansion effects, and nonneutral technical change. The model is applied to a large Canadian telecommunications firm, Bell Canada, for the period 1952-1972 when detailed data on four occupational groups, capital, materials, output, and the extent of automation are available. Our empirical results demonstrate the strong effects of innovative activity in this industry. Technical change was capital-using and labor-saving, with the labor-saving impact being felt most severely by the least skilled occupations.

The authors are members of the faculty of the Institute for Policy Analysis. University of Toronto.
This paper is based on research funded by the Canadian Federal Department of Communications. The views expressed here do not necessarily represent the views of that Department. We wish to thank Daniel Hamermesh for his helpful comments and Carol Everson and Esther Chua for excellent research assistance. All errors and omissions are the responsibility of the authors.

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US ISSN 0022-166X

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