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A Non-parametric Examination of Capital-Skill Complementarity

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  • Daniel J. Henderson

Abstract

This paper uses non-parametric 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 labour and the elasticity of substitution measure being used. The added flexibility of the non-parametric procedure is also capable of uncover ing that the elasticities of substitution vary across countries, groups of countries and time periods. Copyright (c) Blackwell Publishing Ltd and the Department of Economics, University of Oxford, 2009.

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Article provided by Department of Economics, University of Oxford in its journal Oxford Bulletin of Economics and Statistics.

Volume (Year): 71 (2009)
Issue (Month): 4 (08)
Pages: 519-538

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Handle: RePEc:bla:obuest:v:71:y:2009:i:4:p:519-538

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Cited by:
  1. Chassamboulli, Andri & Palivos, Theodore, 2013. "The impact of immigration on the employment and wages of native workers," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 19-34.
  2. Wang, Le, 2013. "Estimating returns to education when the IV sample is selective," Labour Economics, Elsevier, vol. 21(C), pages 74-85.
  3. Xue, Jianpo & Yip, Chong K., 2013. "Aggregate elasticity of substitution and economic growth: A synthesis," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 60-75.

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