DIE 03/19 - Employment and capital price: an analysis for Uruguay based on the tasks approach

Following an adaptation of the tasks approach developed by Autor, Levy & Murnane (2003) in which employment is categorized as routine, abstract or manual depending on the intensity of execution of different types of tasks in each occupation, this paper examines the effects on employment of a decline in the capital price in relation to the wage. To this end, three vector error correction models are estimated based on employment series by categories, built with Continuous Household Surveys data from 2001 to 2017. The elasticities analysis results indicate that abstract employment reacts positively to a decline in the capital relative price, while routine and manual employment react negatively when this price falls, resulting the routine more elastic than the latter.