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Optimal Technology and Development

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  • Moscoso Boedo, Hernan

Abstract

Skill intensive technologies seem to be adopted by rich countries rather than poor ones. Related to that observation, the ratio of wages of skilled to unskilled workers - the skill premium - shows two important features over time and across countries. In the US the skill premium decreased during the first half of the 20th century and it increased after 1950, evolving according to a U shaped pattern. On the other hand, the same measure across countries around 1990 is hump shaped when countries are ordered by GDP per worker. By modeling the decisions for factor accumulation and technology adoption, this paper gives a systematic explanation as to why we see ever more skill intensive technologies being adopted both over time in the US and across countries. The model developed here endogenously generates predictions for the skill premium that are consistent with both the US and international observations under the same set of parameter values.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1644.

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Date of creation: Sep 2006
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Handle: RePEc:pra:mprapa:1644

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Keywords: Technology adoption; growth;

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References

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  1. Daron Acemoglu, 2001. "Directed Technical Change," NBER Working Papers 8287, National Bureau of Economic Research, Inc.
  2. Jovanovic, B., 1998. "Vintage Capital and Equality," Working Papers, C.V. Starr Center for Applied Economics, New York University 98-16, C.V. Starr Center for Applied Economics, New York University.
  3. Psacharopoulos, George & Patrinos, Harry Anthony, 2002. "Returns to investment in education : a further update," Policy Research Working Paper Series 2881, The World Bank.
  4. Funk, Peter & Vogel, Thorsten, 2004. "Endogenous skill bias," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 28(11), pages 2155-2193, October.
  5. R. Glenn Hubbard & Jonathan Skinner & Stephen P. Zeldes, 1993. "The Importance of Precautionary Motives in Explaining Individual and Aggregate Saving," NBER Working Papers 4516, National Bureau of Economic Research, Inc.
  6. Chad Turner & Robert Tamura & Sean Mulholland, 2013. "How important are human capital, physical capital and total factor productivity for determining state economic growth in the United States, 1840–2000?," Journal of Economic Growth, Springer, vol. 18(4), pages 319-371, December.
  7. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change And Wage Inequality," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 113(4), pages 1055-1089, November.
  8. Jovanovic, Boyan & Nyarko, Yaw, 1996. "Learning by Doing and the Choice of Technology," Econometrica, Econometric Society, Econometric Society, vol. 64(6), pages 1299-1310, November.
  9. James J. Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explorations with a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents," NBER Working Papers 6384, National Bureau of Economic Research, Inc.
  10. Kevin M. Murphy & W. Craig Riddell & Paul M. Romer, 1998. "Wages, Skills, and Technology in the United States and Canada," NBER Working Papers 6638, National Bureau of Economic Research, Inc.
  11. Papageorgiou, Chris & Perez-Sebastian, Fidel, 2006. "Dynamics in a non-scale R&D growth model with human capital: Explaining the Japanese and South Korean development experiences," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 30(6), pages 901-930, June.
  12. Stephen L. Parente & Edward C. Prescott, 2002. "Barriers to Riches," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661306, December.
  13. Robert J. Barro & Jong-Wha Lee, 1993. "International Comparisons of Educational Attainment," NBER Working Papers 4349, National Bureau of Economic Research, Inc.
  14. Per Krusell & Lee E. Ohanian & Jose-Victor Rios-Rull & Giovanni L. Violante, 1997. "Capital-skill complementarity and inequality: a macroeconomic analysis," Staff Report, Federal Reserve Bank of Minneapolis 239, Federal Reserve Bank of Minneapolis.
  15. John Duffy & Chris Papageorgiou & Fidel Perez-Sebastian, 2004. "Capital-Skill Complementarity? Evidence from a Panel of Countries," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 327-344, February.
  16. Ananth Seshadri & Rodolfo Manuelli, 2005. "Human Capital and the Wealth of Nations," 2005 Meeting Papers 56, Society for Economic Dynamics.
  17. Peter J. Klenow & Mark Bils, 2000. "Does Schooling Cause Growth?," American Economic Review, American Economic Association, vol. 90(5), pages 1160-1183, December.
  18. Kiley, Michael T, 1999. "The Supply of Skilled Labour and Skill-Biased Technological Progress," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 109(458), pages 708-24, October.
  19. Francesco Caselli & Wilbur John Coleman II, 2000. "The World Technology Frontier," NBER Working Papers 7904, National Bureau of Economic Research, Inc.
  20. repec:fth:starer:9816 is not listed on IDEAS
  21. Chari, V V & Hopenhayn, Hugo, 1991. "Vintage Human Capital, Growth, and the Diffusion of New Technology," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 99(6), pages 1142-65, December.
  22. repec:fth:starer:98-16 is not listed on IDEAS
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Cited by:
  1. Hernan J. Moscoso Boedo, 2006. "Former Communist Countries and their transition to Capitalism," Virginia Economics Online Papers 372, University of Virginia, Department of Economics.

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