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Capital-Skill Complementarity? Evidence from a Panel of Countries

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Author Info
John Duffy (University of Pittsburgh)
Chris Papageorgiou (Louisiana State University)
Fidel Perez-Sebastian (Universidad de Alicante)

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Abstract

Since Griliches (1969), researchers have been intrigued by the idea that physical capital and skilled labor are more complementary than physical capital and unskilled labor. In this paper we consider the cross-country evidence for capital-skill complementarity using a time-series cross-section panel of 73 developed and less developed countries over a 25-year period. We focus on three empirical issues. First, what is the best specification of the aggregate production technology to address the capital-skill complementarity hypothesis? Second, how should we measure skilled labor? Finally, is there any cross-country evidence in support of the capital-skill complementarity hypothesis? Our main finding is that there is some empirical support for the capital-skill complementarity hypothesis in our macro panel data set. Copyright (c) 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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File URL: http://www.mitpressjournals.org/doi/pdfplus/10.1162/003465304323023840
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Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 86 (2004)
Issue (Month): 1 (02)
Pages: 327-344
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Handle: RePEc:tpr:restat:v:86:y:2004:i:1:p:327-344

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment Updates and Implications," NBER Working Papers 7911, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Stokey, Nancy L, 1996. " Free Trade, Factor Returns, and Factor Accumulation," Journal of Economic Growth, Springer, vol. 1(4), pages 421-47, December.
  3. Duffy, John & Papageorgiou, Chris, 2000. " A Cross-Country Empirical Investigation of the Aggregate Production Function Specification," Journal of Economic Growth, Springer, vol. 5(1), pages 87-120, March. [Downloadable!] (restricted)
  4. Kumar, T Krishna & Gapinski, James H, 1974. "Nonlinear Estimation of the CES Production Parameters: A Monte Carlo Study," The Review of Economics and Statistics, MIT Press, vol. 56(4), pages 563-67, November. [Downloadable!] (restricted)
  5. Thursby, Jerry, 1980. "Alternative CES Estimation Techniques," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 295-99, May. [Downloadable!] (restricted)
  6. Eli Berman & John Bound & Stephen Machin, 1998. "Implications Of Skill-Biased Technological Change: International Evidence," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1245-1279, November. [Downloadable!] (restricted)
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  7. Fallon, P R & Layard, P R G, 1975. "Capital-Skill Complementarity, Income Distribution, and Output Accounting," Journal of Political Economy, University of Chicago Press, vol. 83(2), pages 279-301, April. [Downloadable!] (restricted)
  8. Bergstrom, Villy & Panas, Epaminondas E, 1992. "How Robust Is the Capital-Skill Complementarity Hypothesis?," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 540-46, August. [Downloadable!] (restricted)
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  1. Shekhar Aiyar & Carl-Johan Dalgaard, 2008. "Accounting for Productivity: Is it OK to Assume that the World is Cobb-Douglas?," Discussion Papers 08-14, University of Copenhagen. Department of Economics. [Downloadable!]
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  2. Chris Papageorgiou & Kaz Miyagiwa, . "The Elasticity of Substitution, Hicks' Conjectures, and Economic Growth," Departmental Working Papers 2003-08, Department of Economics, Louisiana State University. [Downloadable!]
  3. Kalemli-Ozcan, Sebnem & Chanda, Areendam & Alfaro, Laura & Sayek, Selin, 2007. "How Does Foreign Direct Investment Promote Economic Growth? Exploring The Effects Of Financial Markets On Linkages," Proceedings of the German Development Economics Conference, Göttingen 2007 28, Verein für Socialpolitik, Research Committee Development Economics. [Downloadable!]
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  4. Hui He & Zheng Liu, 2006. "Investment-Specific Technical Change and the Dynamics of Skill Accumulation and Wage Inequality," Emory Economics 0609, Department of Economics, Emory University (Atlanta). [Downloadable!]
  5. Hui He & Zheng Liu, 2008. "Investment-Specific Technological Change, Skill Accumulation, and Wage Inequality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(2), pages 314-334, April. [Downloadable!] (restricted)
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  6. Henderson, Daniel J., 2008. "A Nonparametric Examination of Capital-Skill Complementarity," IZA Discussion Papers 3865, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. Christian Jaag, 2005. "The Role of Endogenous Skill Choice in an Aging Economy," Public Economics 0505005, EconWPA. [Downloadable!]
  8. Pedro de Araujo, 2008. "The Socio-Economic Distribution of AIDS Incidence and Output," Caepr Working Papers 2008-014_updated, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington. [Downloadable!]
  9. Manuel A. Hidalgo Pérez & Jesús Rodríguez López & José María O´Kean Alonso, 2008. "Labor Demand and Information Technologies: Evidence for Spain, 1980-2005," Working Papers 08.12, Universidad Pablo de Olavide, Department of Economics. [Downloadable!]
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  10. Chris Papageorgiou & Viera Chmelarova, . "Nonlinearities in Capital-Skill Complementarity," Departmental Working Papers 2003-07, Department of Economics, Louisiana State University. [Downloadable!]
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  11. Fidel Pérez Sebastián, 2008. "Testing Capital-Skill Complementarity Across Sectors in a Panel of Spanish Regions," Working Papers. Serie EC 2008-11, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
  12. Winford H. Masanjala & Chris Papageorgiou, 2004. "The Solow model with CES technology: nonlinearities and parameter heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(2), pages 171-201. [Downloadable!]
  13. Matti Viren, 2006. "Higher wages and capital intensity: a closer look," Discussion Papers 13, Aboa Centre for Economics. [Downloadable!]
  14. Chris Papageorgiou & Marianne Saam, . "Two-Level CES Production Technology in the Solow and Diamond Growth Models," Departmental Working Papers 2005-07, Department of Economics, Louisiana State University. [Downloadable!]
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  15. Matti Virén, 2005. "Why do capital intensive companies pay higher wages?," Labor and Demography 0508014, EconWPA. [Downloadable!]
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