Long-Run Substitutability between More and Less Educated Workers: Evidence from U.S. States 1950-1990

Ciccone, Antonio; Peri, Giovanni

doi:10.2139/ssrn.563853

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Long-Run Substitutability between More and Less Educated Workers: Evidence from U.S. States 1950-1990

UPF Economics and Business Working Paper No. 764

35 Pages Posted: 12 Jul 2004

See all articles by Antonio Ciccone

Antonio Ciccone

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Giovanni Peri

University of California, Davis - Department of Economics

Date Written: June 2004

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.

Keywords: Elasticity of substitution, education, U.S. states, skill biased technological change

JEL Classification: J3, R1, O3

Suggested Citation: Suggested Citation

Ciccone, Antonio and Peri, Giovanni, Long-Run Substitutability between More and Less Educated Workers: Evidence from U.S. States 1950-1990 (June 2004). UPF Economics and Business Working Paper No. 764, Available at SSRN: https://ssrn.com/abstract=563853 or http://dx.doi.org/10.2139/ssrn.563853