Directed technical change, the elasticity of substitution and wage inequality in developing countries
We develop a model of endogenous skill-biased technical change in developing countries.� The model reconciles wildly dispersed existing estimates of the elasticity of substitution between more and less educated workers.� It also produces an estimating equation for the elasticity, which allow us to produce overdue estimates for developing countries.� With four types of data, elasticity estimates for developing countries are consistently about 2.� In a skill-biased technical change framework, this estimate makes sense of what appears to be little or no correlation between relative skill supply and wage inequality.
|Date of creation:||01 Dec 2009|
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