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A Nonparametric Examination of Capital-Skill Complementarity

Author Info

  • Henderson, Daniel J.

    ()

    (University of Alabama)

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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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3865.

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Length: 31 pages
Date of creation: Dec 2008
Date of revision:
Publication status: published in: Oxford Bulletin of Economics and Statistics , 2009, 71 (4), 519 - 538
Handle: RePEc:iza:izadps:dp3865
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Keywords: capital-skill complementarity; nonparametric kernel; stochastic dominance; elasticity of substitution;

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

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Cited by:

  1. Jakub Growiec & Anna Pajor & Dorota Gorniak & Artur Predki, 2015. "The shape of aggregate production functions: evidence from estimates of the World Technology Frontier," Bank i Kredyt, National Bank of Poland, Economic Institute, vol. 46(4), pages 299-326.
  2. Xue, Jianpo & Yip, Chong K., 2013. "Aggregate elasticity of substitution and economic growth: A synthesis," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 60-75.
  3. Wang, Le, 2012. "Estimating Returns to Education when the IV Sample is Selective," IZA Discussion Papers 7103, Institute for the Study of Labor (IZA).
  4. Kai Sun, 2015. "Constrained nonparametric estimation of input distance function," Journal of Productivity Analysis, Springer, vol. 43(1), pages 85-97, February.
  5. Andri Chassamboulli & Theodore Palivos, 2013. "The impact of immigration on the employment and wages of native workers," Working Papers 160, Bank of Greece.

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