CAPITAL-SKILL COMPLEMENTARITY? EVIDENCE FROM A PANEL OF COUNTRIES

Chris Papageorgiou (), Fidel Perez Sebastian and John Duffy

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: Since Griliches (1969), researchers have been intrigued by the idea that physical capital and skilled labor are relatively more complementary than physical capital and unskilled labor. This capital-skill complementarity hypothesis has received renewed attention recently, as researchers have suggested that this phenomenon might account for rising wage inequality between skilled and unskilled workers in several developed countries. In this paper we consider the cross-country evidence for capital--skill complementarity using a time-series, cross-section panel of 73 developed and less developed countries over a 25 year period. In particular, we focus on three empirical issues. First, what is the best specification of the aggregate production technology to address the capital-skill complementarity hypothesis. Second, how should we measure skilled labor? Finally, is there any cross-country evidence in support of the capital-skill complementarity hypothesis? Our main finding is that we are unable to reject the null hypothesis of no capital-skill complementarity using our panel data set.

Keywords: Input Complementarities; Production Function Estimation (search for similar items in EconPapers)
JEL-codes: O40 O47 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2002-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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http://www.ivie.es/downloads/docs/wpasad/wpasad-2002-09.pdf Fisrt version / Primera version, 2002 (application/pdf)

Related works:
Journal Article: Capital-Skill Complementarity? Evidence from a Panel of Countries (2004)
Working Paper: Capital-Skill complementarity? Evidence from a Panel of Countries (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2002-09

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