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A Nonparametric Examination of Capital-Skill Complementarity

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  • Henderson, Daniel J.

    ()
    (University of Alabama)

Abstract

This paper uses nonparametric 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 labor and the elasticity of substitution measure being used. The added flexibility of the nonparametric procedure is also able to uncover that the elasticities of substitution vary across countries, groups of countries and time periods.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3865.

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Length: 31 pages
Date of creation: Dec 2008
Date of revision:
Publication status: published in: Oxford Bulletin of Economics and Statistics , 2009, 71 (4), 519 - 538
Handle: RePEc:iza:izadps:dp3865

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Keywords: capital-skill complementarity; nonparametric kernel; stochastic dominance; elasticity of substitution;

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References

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Cited by:
  1. Andri Chassamboulli & Theodore Palivos, 2013. "The impact of immigration on the employment and wages of native workers," Working Papers, Bank of Greece 160, Bank of Greece.
  2. Wang, Le, 2013. "Estimating returns to education when the IV sample is selective," Labour Economics, Elsevier, 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, Elsevier, vol. 38(PA), pages 60-75.

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