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Importing Skill-Biased Technology

Author

Listed:
  • Jonathan Vogel

    (Columbia and NBER)

  • Javier Cravino

    (UCLA)

  • Ariel Burstein

    (UCLA and NBER)

Abstract

Capital equipment, such as computers and industrial machinery, embodies skill-biased technology and, hence, is complementary to skilled labor. Many countries, by importing a large share of their capital, import skill-biased technology and a rise in the skill premium. In this paper we develop a model to derive the qualitative and quantitative implications of changes in trade patterns for the skill premium through capital-skill complementarity. In one counterfactual, we find that moving from the trade levels observed in the year 2000 to autarky would imply a decrease in the skill premium of 14% for the median country in our sample, of 5% for the U.S., and of a much larger magnitude for countries that heavily rely on imported capital equipment.

Suggested Citation

  • Jonathan Vogel & Javier Cravino & Ariel Burstein, 2011. "Importing Skill-Biased Technology," 2011 Meeting Papers 440, Society for Economic Dynamics.
    • Handle: RePEc:red:sed011:440
    as

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    JEL classification:

    • F1 - International Economics - - Trade

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