Journal Article

Capital-skill complementarity and wage outcomes following technical change in a global model

R Tyers and Y Yang

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 16, issue 3, pages 23-41
Published in print September 2000 | ISSN: 0266-903X
Published online September 2000 | e-ISSN: 1460-2121 | DOI: https://dx.doi.org/10.1093/oxrep/16.3.23
Capital-skill complementarity and wage outcomes following technical change in a global model

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  • Economic Development and Growth
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We estimate the extent of factor bias in technical changes consistent with observed changes in skill premia. To control for the effects of expanded trade on wages we use a structural model with multiple regions and comparative static analysis. Two alternative biased technical-change stories emerge: skill enhancement when capital and skill are substitutes and capital enhancement when capital and skill are complements. These imply different underlying technical-change processes and macroeconomic behaviour in response to technical-change shocks. Capital enhancement offers the more credible process, however, and is consistent with observed rises in the 'equipment content' of the capital stock.

Journal Article.  0 words. 

Subjects: Economic Development and Growth ; Public Economics ; Political Economy ; Public Policy

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