Skill-biased Technology Adoption: Evidence for the Chilean manufacturing sector

Olga Fuentes and Simon Gilchrist

No WP2005-045, Boston University - Department of Economics - Working Papers Series from Boston University - Department of Economics

Abstract: We examine the evolution of the demand for skilled workers relative to unskilled workers in the Chilean manufacturing sector following Chile’s liberalization of trade in the late 1970’s. Following such trade reforms, the standard Heckscher-Olin model predicts that a low labor-cost country like Chile should experience an increased demand for low skilled workers relative to high skilled workers. Alternatively, if trade liberalization is associated with the adoption of new technologies, and technology is skill-biased, the relative demand for skilled workers may rise. Using a newly available plant-level data set that spans the sixteen year period 1979-1995, we find that the relative demand for skilled workers rose sharply during the 1979-1986 period and then stabilized. The sharp increase in demand for skilled workers coincided with an increased propensity to adopt new technologies as measured by patent usage. Plant-level analysis of labor demand confirms a significant relationship between the relative demand for skilled workers and technology adoption as measured by patent usage and other technology indicators. Our results suggest that skill-biased technological change is a significant determinant of labor demand and wage structures in developing economies.

Pages: 24
Date: 2005-11
New Economics Papers: this item is included in nep-ino, nep-int and nep-lab
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Citations: View citations in EconPapers (7)

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