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Directed technical change, the elasticity of substitution and wage inequality in developing countries

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  • Alberto Behar

Abstract

We develop a model of endogenous skill-biased technical change in developing countries.� The model reconciles wildly dispersed existing estimates of the elasticity of substitution between more and less educated workers.� It also produces an estimating equation for the elasticity, which allow us to produce overdue estimates for developing countries.� With four types of data, elasticity estimates for developing countries are consistently about 2.� In a skill-biased technical change framework, this estimate makes sense of what appears to be little or no correlation between relative skill supply and wage inequality.

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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 467.

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Date of creation: 01 Dec 2009
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Handle: RePEc:oxf:wpaper:467

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Related research

Keywords: Skill-based technical change; Elasticity of substitution; Wage premium;

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Cited by:
  1. Mauro Caselli, 2010. "Trade liberalisation, skill-biased technical change and wages in developing countries: a model with heterogeneous firms," Economics Series Working Papers CSAE WPS/2010-27, University of Oxford, Department of Economics.
  2. Mauro Caselli, 2010. "Trade, skill-biased technical change and wages in Mexican manufacturing," Economics Series Working Papers CSAE WPS/2010-28, University of Oxford, Department of Economics.
  3. Alberto Behar, 2013. "The Endogenous Skill Bias of Technical Change and Inequality in Developing Countries," IMF Working Papers 13/50, International Monetary Fund.

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