The highly skilled labor market
The formation of a highly skilled labor market
The subjects in the highly skilled labor market are individuals with professional knowledge and skills and who use those resources as major input factors in creating value. The objects in the highly skilled labor market are innovative high-tech firms. The emergence of this market is the outcome of technology development in society. Society has realized the value of technology. For example, Say (1836) notes that man’s techniques and capabilities can improve production efficiency, but such capability is costly to acquire. Marshall (1961) believes that wisdom and capability are important production factors and the driving force for productivity improvement. Moreover, the requirement for capabilities will be higher with the development of production. However, in economics circles, studies on the skilled labor market received attention only after the rapid development of technology had a substantial impact on contemporary society. Some scholars note that economic development has already exceeded the growth of physical capital, and the traditional view of economics, the capital homogeneity assumption, can no longer explain the mystery of economic growth.
In the 1950s, Solow (1957), as the representative of economists, measures “growth residuals,” which cannot be explained by the traditional theory of capital determination using the statistical data from 1909 to 1949. The results show that the contribution rate of technical progress to the economic growth rate is 87.5%. This implies that without increasing production inputs, technical progress changes the production function to realize the long-term balanced growth of an economy. Although Solow proves the effect of technical progress on economic growth, any application of technology cannot be separated from human participation. Whether it is the manufacturing of equipment or the operation of such equipment that can improve production efficiency, technical talent that masters unique skills are particularly in demand.
Based on previous studies, Schultz (1961) combines economic development with the role of individuals and studies the return rate on educational investment and the contribution of education to economic growth. The conclusion shows that labor is the most important among all resources, and those individuals with knowledge and skills are the determinants of economic growth. Schultz establishes human capital theory and suggests the concept of human capital. Furthermore, he argues that human capital is the resource owned by individuals themselves and takes the form of knowledge, skills, qualifications, experience, and working proficiency. The author also states that the formation of human capital is closely related to the input of education and that education and training are a type of investment that will generate benefits in the long run. In empirical studies on the rapid recovery and development of Western European countries after World War II, Schultz shows that it is more important to increase the investment in human capital than physical capital for economic growth from the macro perspective. For the same time period, Becker (1962) analyzes human capital from the micro perspective. The author gives a full explanation of the nature of human capital and its corresponding investment behavior by combining human capital with income distribution.
In the 1980s, Romer and Lucas (1988) suggest the endogenous economic growth theory based on knowledge and the high-and-new technology contribution to the economy. The authors take human capital as the endogenous variable that would affect economic development and hold that knowledge and technique, as human capital, are the most important factors, and the returns are higher than those of physical capital. Furthermore, investment in knowledge capital is a key factor of economic growth. Lack of human capital is a major cause of economic underdevelopment of a country or region. Sveiby (1997) extends the above theories. He accurately defines the skills and knowledge of employees as knowledge capital, and recognizes this capital as a type of intangible asset of any firm or organization and a core competence of a firm.
From the demand side perspective, highly skilled individuals play an important role in production and even become the dominant factor of commodity production. Particularly since the 1980s and the emergence of the knowledge economy, significant changes have occurred with respect to new materials and technology, and numerous high and new technology firms have promoted the development of the global economy. Without doubt, highly skilled talent has played a prominent role. Compared with ordinary workers, the work of skilled labor is characterized as intellectual, complex, creative, exploratory, independent, and continuous in nature. Knowledge resources have become the main production factor in the creation of value rather than physical resources. The vying for talented employees among firms causes skilled workers to request higher wages. Currently, it is less efficient to attract talent purely by increasing wages and welfare. Offering ownership shares of a technology firm or holding the claims on a firm’s surplus are common strategies used to motivate highly skilled personnel.
