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Capital-Skill Complementarity and Wage Outcomes Following Technical Change in a Global Model

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  • Tyers, Rod
  • Yang, Yongzheng

Abstract

We estimate the extent of factor bias in technical changes consistent with observed changes in skill premia. To control for the effects of expanded trade on wages we use a structural model with multiple regions and comparative static analysis. Two alternative biased technical-change stories emerge: skill enhancement when capital and skill are substitutes and capital enhancement when capital and skill are complements. These imply different underlying technical-change processes and macroeconomic behaviour in response to technical-change shocks. Capital enhancement offers the more credible process, however, and is consistent with observed rises in the "equipment content" of the capital stock. Copyright 2000 by Oxford University Press.

Suggested Citation

  • Tyers, Rod & Yang, Yongzheng, 2000. "Capital-Skill Complementarity and Wage Outcomes Following Technical Change in a Global Model," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 16(3), pages 23-41, Autumn.
    • Handle: RePEc:oup:oxford:v:16:y:2000:i:3:p:23-41
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    Citations

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    Cited by:

    1. Harris, Richard G. & Robertson, Peter E., 2013. "Trade, wages and skill accumulation in the emerging giants," Journal of International Economics, Elsevier, vol. 89(2), pages 407-421.
    2. Michel Dumont, 2006. "Foreign Outsourcing, Labour Demand and the Choice of Functional Form," Journal of Applied Economics, Taylor & Francis Journals, vol. 9(2), pages 255-273, November.
    3. Tyers, Rod, 2015. "International effects of China's rise and transition: Neoclassical and Keynesian perspectives," Journal of Asian Economics, Elsevier, vol. 37(C), pages 1-19.
    4. Rod Tyers & Yixiao Zhou, 2023. "Automation and inequality with taxes and transfers," Scottish Journal of Political Economy, Scottish Economic Society, vol. 70(1), pages 68-100, February.
    5. Rutherford, Donald E., 2002. "Past and Future Sources of Productivity Growth in Fibre Drum Manufacturing," Conference papers 331064, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Meng, Sam, 2015. "Modeling the impact of exchange rates using a multicurrency framework," Economic Modelling, Elsevier, vol. 49(C), pages 223-231.
    7. Rod Tyers & Yongzheng Yang, 2004. "The Asian Recession and Northern Labour Markets," The Economic Record, The Economic Society of Australia, vol. 80(248), pages 58-75, March.
    8. Milenko Popovic, 2007. "Rising Wage Inequality, Rate Of Return On Investment In Education, And Cost Of Education," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 3(5), pages 35-58.
    9. Niven Winchester, 2008. "Searching for the Smoking Gun: Did Trade Hurt Unskilled Workers?," The Economic Record, The Economic Society of Australia, vol. 84(265), pages 141-156, June.
    10. Ardelean, Adina & Lugovskyy, Volodymyr, 2007. "When Are Variety Gains from Trade Important? Domestic Productivity and the Cost of Protectionism," Conference papers 331662, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    11. Dong, Baomin & Ma, Xili & Wang, Ningjing & Wei, Weixian, 2020. "Impacts of exchange rate volatility and international oil price shock on China's regional economy: A dynamic CGE analysis," Energy Economics, Elsevier, vol. 86(C).
    12. Rees, Lucy & Tyers, Rod, 2004. "Trade reform in the short run: China's WTO accession," Journal of Asian Economics, Elsevier, vol. 15(1), pages 1-31, February.
    13. Tyers, Rodney & Yang, Yongzheng, 2001. "Global Effects of US “New Economy” Shocks: the Role of Capital-Skill Complementarity," 2001 Conference (45th), January 23-25, 2001, Adelaide, Australia 125983, Australian Agricultural and Resource Economics Society.
    14. Richard G. Harris & Peter E. Robertson & Jessica Y. Xu, 2011. "The International Effects of China’s Growth, Trade and Education Booms," The World Economy, Wiley Blackwell, vol. 34(10), pages 1703-1725, October.
    15. Buchner, Barbara K. & Roson, Roberto, 2002. "Conflicting Perspectives in Trade and Environmental Negotiations," Conference papers 330990, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    16. Meng, Xianming & Siriwardana, Mahinda & McNeill, Judith, 2013. "The Impact of an Appreciation of the Chinese Yuan on the Global Trade," Conference papers 332340, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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