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Capital-Skill Complementarity: Evidence from Manufacturing Industries in Ghana

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  • Akay, Gokhan H.

    ()
    (Trinity University)

  • Yuksel, Mutlu

    ()
    (Dalhousie University)

Abstract

Using U.S. manufacturing data, Griliches (1969) found evidence suggesting that capital equipment was more substitutable for unskilled than skilled labor. Griliches formulated this finding as the capital-skill complementarity hypothesis. The purpose of this study is to determine whether the capital-skill complementarity framework holds for Ghana manufacturing plants in industry and aggregate level. We use an unbalanced panel of plant-level data for manufacturing firms in Ghana during the 1991 and 1997 in four industries (food-bakery, textiles-garments, wood-furniture and metal-machinery). Our findings suggest that capital-skill complementarity holds in aggregate level and wood-furniture sector in Ghana. However, we reject the capital-skill complementarity hypothesis for food-bakery, textile-garment and metal-machinery sectors.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4674.

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Length: 23 pages
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4674

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Keywords: elasticity of substitution; capital-skill complementarity; translog cost function;

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