The Input–Output Framework for Analysing Changes in the Use of Labour by Education Levels

Abstract

The input–output framework is applied in this study to analyse changes in use of labour input classified by education levels. The changes are decomposed by comparing the open static input–output model between the initial year and the terminal year. Changes in the use of primary inputs are decomposed into the effect of growth, the effect of structural change in the final demand, the effect of change in intermediate output coefficients, and the effect of change in primary input coefficients. Change in the cost of shares are decomposed into the effect of change in primary input coeficients, the effect of change in intermediate input coefficients, the effect of change in the average factor price of the primary input, and the effect of structural change in the factor price of the primary input. Change in the use of labour input and the first three components of change in the cost shares were analysed for educational labour inputs in the Finnish economy between 1970 and 1980.