Capital-Skill Complementarity in Firms and in the Aggregate Economy

Giuseppe Berlingieri, Filippo Boeri, Danial Lashkari and Jonathan Vogel

No 33000, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study capital-skill complementarity in a multi-sector framework featuring firm-specific, multi-factor production functions. We characterize the elasticity of the skill premium to the price of capital equipment in terms of firm-level elasticities of substitution across factors, elasticities of substitution across firms and sectors, and factor intensities. Using French administrative data, we first provide reduced-form evidence that equipment-intensive firms are relatively skill-intensive and that exogenous declines in firm-level equipment prices increase firms’ relative demand for skilled labor. We then estimate the micro-level elasticities needed for theory-guided aggregation, providing the first identification of aggregate capital-skill complementarity allowing for arbitrary firm, industry, and aggregate trends in unobserved skill-biased productivity. We find statistically and economically significant aggregate capital-skill complementarity, but this force alone is insufficient to generate the full increase in the relative demand for high-skilled workers observed in the data.

JEL-codes: E10 E23 E25 J30 (search for similar items in EconPapers)
Date: 2024-09
New Economics Papers: this item is included in nep-bec, nep-eff, nep-lma and nep-tid
Note: ITI
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Capital-skill complementarity in firms and in the aggregate economy (2024)
Working Paper: Capital-skill complementarity in firms and in the aggregate economy (2024)
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