Importing Skill-Biased Technology

41 Pages Posted: 30 Sep 2011 Last revised: 18 Mar 2022

See all articles by Ariel T. Burstein

Ariel T. Burstein

University of California, Los Angeles (UCLA) - Department of Economics

Javier Cravino

University of California, Los Angeles

Jonathan Vogel

UCLA; NBER

Date Written: September 2011

Abstract

Capital equipment - such as computers and industrial machinery - embodies skill-biased technology, in the sense that it is complementary to skilled labor. Most countries import a large share of their capital equipment, and by doing so import skill-biased technology. In this paper we develop a tractable quantitative model of international trade in capital goods to quantify the extent to which trade, through capital-skill complementarity, raises the relative demand for skill and hence increases the skill premium. In one counterfactual, we find that moving from the trade levels observed in the year 2000 to autarky would decrease the skill premium by 16% in the median country in our sample, by 5% in the US, and by a much larger magnitude in countries that heavily rely on imported capital equipment.

Suggested Citation

Burstein, Ariel T. and Cravino, Javier and Vogel, Jonathan, Importing Skill-Biased Technology (September 2011). NBER Working Paper No. w17460, Available at SSRN: https://ssrn.com/abstract=1935786

Ariel T. Burstein (Contact Author)

University of California, Los Angeles (UCLA) - Department of Economics ( email )

Box 951477
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Los Angeles, CA 90095-1477
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Javier Cravino

University of California, Los Angeles

Box 951477
Los Angeles, CA 90095-1477
United States

Jonathan Vogel

UCLA ( email )

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Los Angeles, CA 90095-1477
United States

NBER ( email )

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