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A Nonparametric Examination of Capital-Skill Complementarity

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  • 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.

Suggested Citation

  • Henderson, Daniel J., 2008. "A Nonparametric Examination of Capital-Skill Complementarity," IZA Discussion Papers 3865, Institute for the Study of Labor (IZA).
    • Handle: RePEc:iza:izadps:dp3865
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Wang, Le, 2013. "Estimating returns to education when the IV sample is selective," Labour Economics, Elsevier, vol. 21(C), pages 74-85.
    2. 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, Narodowy Bank Polski, vol. 46(4), pages 299-326.
    3. Chassamboulli, Andri & Palivos, Theodore, 2013. "The impact of immigration on the employment and wages of native workers," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 19-34.
    4. 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.
    5. Kai Sun, 2015. "Constrained nonparametric estimation of input distance function," Journal of Productivity Analysis, Springer, vol. 43(1), pages 85-97, February.

    More about this item

    Keywords

    capital-skill complementarity; nonparametric kernel; stochastic dominance; elasticity of substitution;

    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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