Capital-Skill Complementarity, Productivity and Wages: Evidence from Plant-Level Data for a Developing Country

Labour Economics, Vol. 15, No. 1, pp. 1-17, 2008

Posted: 4 Mar 2011

See all articles by Mahmut Yasar

Mahmut Yasar

University of Texas at Arlington - Department of Economics; Emory University - Department of Economics

Catherine J. Morrison Paul

University of California, Davis - Department of Agricultural and Resource Economics; National Bureau of Economic Research (NBER); University of Hartford - Barney School of Business

Date Written: 2008

Abstract

Different types of labor and capital inputs have varying productive contributions that are dependent on plant characteristics. We estimate such contributions and their underlying determinants, recognizing the interactions among labor and capital components that reflect their substitutability or complementarity, for Turkish manufacturing plants. We distinguish technical and non-technical labor, and structures, machinery and computer capital, as well as the shares of female workers and imported capital in our production function specification. We find capital-skill complementary for both machinery and computers; greater productive contributions and thus wages for skilled labor are associated with more machinery intensity and computer use. The reverse is true for unskilled labor, which is complementary only with capital structures. Our results suggest that synergies among skilled (technical) labor, computers, and machinery capital have productivity- and skilled wage-enhancing effects that could contribute to productivity convergence of developing toward developed countries, even with their differing industry and input composition.

Keywords: capital-skill complementarity, labor and capital composition, plant productivity, wage determinants

JEL Classification: J24, J31, O14

Suggested Citation

Yasar, Mahmut and Morrison Paul, Catherine J., Capital-Skill Complementarity, Productivity and Wages: Evidence from Plant-Level Data for a Developing Country (2008). Labour Economics, Vol. 15, No. 1, pp. 1-17, 2008, Available at SSRN: https://ssrn.com/abstract=1774983

Mahmut Yasar (Contact Author)

University of Texas at Arlington - Department of Economics ( email )

701 S. West Street
Arlington, TX 76019
United States

Emory University - Department of Economics ( email )

Catherine J. Morrison Paul

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
Davis, CA 95616
United States
916-752-0469 (Phone)
916-752-5614 (Fax)

National Bureau of Economic Research (NBER)

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University of Hartford - Barney School of Business

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West Hartford, CT 06117
United States

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