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Importing Skill-Biased Technology

  • Jonathan Vogel

    (Columbia and NBER)

  • Javier Cravino

    (UCLA)

  • Ariel Burstein

    (UCLA and NBER)

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.

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Paper provided by Society for Economic Dynamics in its series 2011 Meeting Papers with number 440.

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Date of creation: 2011
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Handle: RePEc:red:sed011:440
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Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/
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