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A Nonparametric Examination of Capital-Skill Complementarity

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Author Info
Henderson, Daniel J. () (Binghamton University, New York)

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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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Publisher 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: 2009 pages
Date of creation: Dec 2008
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Publication status: forthcoming in: Oxford Bulletin of Economics and Statistics, 2009
Handle: RePEc:iza:izadps:dp3865

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

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Find related papers by JEL classification:
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
D2 - Microeconomics - - Production and Organizations

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References listed on IDEAS
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