A Nonparametric Examination of Capital-Skill Complementarity

Daniel Henderson ()

No 3865, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper uses nonparametric kernel methods to construct observation-specific elasticities of substitution for a balanced panel of 73 developed and developing countries to examine the capital-skill complementarity hypothesis. The exercise shows some support for capital-skill complementarity, but the strength of the evidence depends upon the definition of skilled labor and the elasticity of substitution measure being used. The added flexibility of the nonparametric procedure is also able to uncover that the elasticities of substitution vary across countries, groups of countries and time periods.

Keywords: capital-skill complementarity; nonparametric kernel; stochastic dominance; elasticity of substitution (search for similar items in EconPapers)
JEL-codes: C14 C23 D2 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2008-12
New Economics Papers: this item is included in nep-bec, nep-lab and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published in: Oxford Bulletin of Economics and Statistics , 2009, 71 (4), 519 - 538

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Related works:
Journal Article: A Non‐parametric Examination of Capital–Skill Complementarity* (2009)
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