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Capital-Skill Complementarity: Evidence from Manufacturing Industries in Ghana

Listed author(s):
  • Akay, Gokhan H.

    ()

    (Trinity University)

  • Yuksel, Mutlu

    ()

    (Dalhousie University)

Using U.S. manufacturing data, Griliches (1969) found evidence suggesting that capital equipment was more substitutable for unskilled than skilled labor. Griliches formulated this finding as the capital-skill complementarity hypothesis. The purpose of this study is to determine whether the capital-skill complementarity framework holds for Ghana manufacturing plants in industry and aggregate level. We use an unbalanced panel of plant-level data for manufacturing firms in Ghana during the 1991 and 1997 in four industries (food-bakery, textiles-garments, wood-furniture and metal-machinery). Our findings suggest that capital-skill complementarity holds in aggregate level and wood-furniture sector in Ghana. However, we reject the capital-skill complementarity hypothesis for food-bakery, textile-garment and metal-machinery sectors.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4674.

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Length: 23 pages
Date of creation: Dec 2009
Handle: RePEc:iza:izadps:dp4674
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  1. repec:fth:oxesaf:97-11 is not listed on IDEAS
  2. 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.
  3. H. Zhou, 2001. "The Demand For Labour In Zimbabwe'S Engineering Industry: 1995-1997," South African Journal of Economics, Economic Society of South Africa, vol. 69(4), pages 734-751, December.
  4. repec:fth:oxesaf:97-10 is not listed on IDEAS
  5. Berndt, Ernst R. & Morrisson, Catherine J., 1979. "Income redistribution and employment effects of rising energy prices," Resources and Energy, Elsevier, vol. 2(2-3), pages 131-150.
  6. Francis Teal, 1997. "Real wages and the demand for skilled and unskilled male labour in Ghana`s manufacturing sector: 1991-1995," Economics Series Working Papers WPS/1997-10, University of Oxford, Department of Economics.
  7. Teal, Francis, 2000. "Real wages and the demand for skilled and unskilled male labour in Ghana's manufacturing sector: 1991-1995," Journal of Development Economics, Elsevier, vol. 61(2), pages 447-461, April.
  8. Bergstrom, Villy & Panas, Epaminondas E, 1992. "How Robust Is the Capital-Skill Complementarity Hypothesis?," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 540-546, August.
  9. Joy Mazumdar & Myriam Quispe-Agnoli, 2004. "Can capital-skill complementarity explain the rising skill premium in developing countries? evidence from Peru," FRB Atlanta Working Paper 2004-11, Federal Reserve Bank of Atlanta.
  10. Bigsten, Arne, et al, 1999. " Investment in Africa's Manufacturing Sector: A Four Country Panel Data Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(4), pages 489-512, November.
  11. Berndt, Ernst R. & Christensen, Laurits R., 1973. "The translog function and the substitution of equipment, structures, and labor in U.S. manufacturing 1929-68," Journal of Econometrics, Elsevier, vol. 1(1), pages 81-113, March.
  12. Yasar, Mahmut & Morrison Paul, Catherine J., 2008. "Capital-skill complementarity, productivity and wages: Evidence from plant-level data for a developing country," Labour Economics, Elsevier, vol. 15(1), pages 1-17, February.
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