Directed technical change, the elasticity of substitution and wage inequality in developing countries

Alberto Behar ()

No 467, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: We develop a model of endogenous skill-biased technical change in developing countries. The model reconciles wildly dispersed existing estimates of the elasticity of substitution between more and less educated workers. It also produces an estimating equation for the elasticity, which allow us to produce overdue estimates for developing countries. With four types of data, elasticity estimates for developing countries are consistently about 2. In a skill-biased technical change framework, this estimate makes sense of what appears to be little or no correlation between relative skill supply and wage inequality.

Keywords: Skill-based technical change; Elasticity of substitution; Wage premium (search for similar items in EconPapers)
JEL-codes: I20 J23 J24 J31 O15 O33 (search for similar items in EconPapers)
Date: 2009-12-01
New Economics Papers: this item is included in nep-dev, nep-lab and nep-lam
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:oxf:wpaper:467

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