What is Assumed in the GTAP Database's Disaggregation of Labor by Skill Level?
AbstractThe 45 region by 50 commodity by 5 primary factor version of the GTAP database provides us with the splits of total labor payments into two categories, viz. skilled and unskilled labor in each sector. The decomposition of total labor payments in all sectors and all regions according to differentials in the skill content of the labor force presupposes substitution possibilities between these two categories of labor. Our interest is to explore the elasticity of substitution implicit in this disaggregation of occupation types. Given the skilled labor payment shares (as calculated from the GTAP database), we offer an ex post rationalization of them within a production-theoretic framework, thereby deriving estimates of the elasticity of substitution between skilled and unskilled labor. The adoption of a suitable nesting of skilled and unskilled labor in GTAP's production function enables us to find a 'reasonable' value for the substitution elasticity that is implicit between the two categories of labor in the GTAP database. This relies on the inter-regional covariation in the GTAP shares and in measures of educational attainment.
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Bibliographic InfoPaper provided by Victoria University, Centre of Policy Studies/IMPACT Centre in its series Centre of Policy Studies/IMPACT Centre Working Papers with number ip-75.
Date of creation: Oct 1999
Date of revision:
Elasticity of substitution Educational attainment Skilled;
Find related papers by JEL classification:
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
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