Changes in the Functional Structure of Firms and the Demand for Skill

We analyze recent changes in the occupational structure of French manufacturing firms. Firms employ a greater proportion of engineers working on the design and marketing of new products and a lower proportion of high‐skill experts working in administration‐related activities. Firms have also reduced the share of production‐related activities at both the levels of high‐skill and low‐skill workers. We develop a labor demand model that shows the role played by technological change. New technologies make it possible to allocate more human resources to the activities that are the most difficult to program in advance.

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