Capital-Skill Complementarity and Wage Outcomes Following Technical Change in a Global Model

Posted: 29 Sep 2001

See all articles by Rod Tyers

Rod Tyers

Australian National University (ANU) - School of Economics; The University of Western Australia - Department of Economics

Yongzheng Yang

International Monetary Fund (IMF) - African Department

Abstract

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.

JEL Classification: D24, D33, D58, F11, J31, O33, O57

Suggested Citation

Tyers, Rod and Yang, Yongzheng, Capital-Skill Complementarity and Wage Outcomes Following Technical Change in a Global Model. Oxford Review of Economic Policy, Vol. 16 No. 3, Autumn 2000. Available at SSRN: https://ssrn.com/abstract=254120

Rod Tyers (Contact Author)

Australian National University (ANU) - School of Economics ( email )

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The University of Western Australia - Department of Economics ( email )

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Australia
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HOME PAGE: http://www.business.uwa.edu.au/school/staff-profiles?type=profile&dn=cn%3DRodney%20Tyers%2Cou%3DEcon

Yongzheng Yang

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States
202-623-4339 (Phone)
202-623-4237 (Fax)

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