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Long-run substitutability between more and less educated workers: Evidence from U.S. States 1950-1990

Abstract

We estimate the aggregate long-run elasticity of substitution between more and less educated workers (the slope of the demand curve for more relative to less educated workers) at the US state level. Our data come from the (five)1950-1990 decennial censuses. Our empirical approach allows for state and time fixed effects and relies on time and state dependent child labor and compulsory school attendance laws as instruments for (endogenous) changes in the relative supply of more educated workers. We find the aggregate long-run elasticity of substitution between more and less educated workers to be around 1.5.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 764.

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Date of creation: Jun 2004
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Handle: RePEc:upf:upfgen:764
Contact details of provider: Web page: http://www.econ.upf.edu/

Keywords: Elasticity of Substitution; Education; U.S. States; Skill Biased Technological Change;

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Find related papers by JEL classification:
  • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
  • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
  • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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