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Machines and machinists: Capital-skill complementarity from an international trade perspective

Author Info

  • Csillag, Márton
  • Koren, Miklós

Abstract

We estimate the effect of imported machines on the wages of machine operators utilizing Hungarian linked employer-employee data. We infer exposure to imported machines from detailed trade statistics of the firm and the occupation description of the worker. We find that workers exposed to imported machines earn about 8 percent higher wages than other machine operators at the same firm. When we proxy for unobserved worker characteristics, we find a significant 3 percent wage premium, suggesting that the relationship is causal. The return to schooling is also higher on imported machines. We build a simple matching model consistent with these findings. Our findings suggest that machine imports can be an important channel through which skill-biased technical change reaches less developed and emerging economies.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8317.

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Date of creation: Apr 2011
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Handle: RePEc:cpr:ceprdp:8317
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Keywords: capital-skill complementarity; imported machinery; linked employer-employee data; wages;

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Find related papers by JEL classification:
  • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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  1. J. DavidBrown & JohnS. Earle & Álmos Telegdy, 2010. "Employment and Wage Effects of Privatisation: Evidence from Hungary, Romania, Russia and Ukraine," Economic Journal, Royal Economic Society, vol. 120(545), pages 683-708, 06.
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  9. Verhoogen, Eric A, 2007. "Trade, Quality Upgrading and Wage Inequality in the Mexican Manufacturing Sector," CEPR Discussion Papers 6385, C.E.P.R. Discussion Papers.
  10. Laszlo Halpern & Miklos Koren & Adam Szeidl, 2005. "Import and Productivity," IEHAS Discussion Papers 0509, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  11. László Halpern & Miklós Koren & Adam Szeidl, 2011. "Imported Inputs and Productivity," CeFiG Working Papers 8, Center for Firms in the Global Economy, revised 16 Sep 2011.
  12. Paula Bustos, 2011. "The Impact of Trade Liberalization on Skill Upgrading Evidence from Argentina," Working Papers 559, Barcelona Graduate School of Economics.
  13. Caselli, Francesco & Wilson, Daniel J., 2004. "Importing technology," Journal of Monetary Economics, Elsevier, vol. 51(1), pages 1-32, January.
  14. Timothy Dunne & J. Bradford Jensen & Mark J. Roberts, 2009. "Producer Dynamics: New Evidence from Micro Data," NBER Books, National Bureau of Economic Research, Inc, number dunn05-1, Jan-Jun.
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  20. Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier.
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Cited by:

  1. Kézdi, Gábor & Mátyás, László & Balázsi, László & Divényi, János Károly, 2014. "A közgazdasági adatforradalom és a panelökonometria
    [The revolution in economic data and panel econometrics]    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1319-1340.
  2. Chinhui Juhn & Gergely Ujhelyi & Carolina Villegas-Sanchez, 2012. "Men, Women, and Machines: How Trade Impacts Gender Inequality," NBER Working Papers 18106, National Bureau of Economic Research, Inc.
  3. Békés, Gábor & Halpern, László & Muraközy, Balázs, 2013. "Külkereskedelem és a vállalatok közötti különbségek
    [Heterogeneous firms and foreign trade]    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 1-24.
  4. Nico Voigtlaender & Diego Saravia, 2015. "Imported Inputs, Quality Complementarity, and Skill Demand," 2015 Meeting Papers 1538, Society for Economic Dynamics.
  5. Lo Turco, Alessia & Maggioni, Daniela, 2013. "Does Trade Foster Employment Growth in Emerging Markets? Evidence from Turkey," World Development, Elsevier, vol. 52(C), pages 1-18.

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