American Economic Review Vol. 96 No. 3 2006
The World Technology Frontier
Abstract
We study cross-country differences in the aggregate production function when skilled and unskilled labor are imperfect substitutes. We find that there is a skill bias in cross-country technology differences. Higher-income countries use skilled labor more efficiently than lower-income countries, while they use unskilled labor relatively and, possibly, absolutely less efficiently. We also propose a simple explanation for our findings: rich countries, which are skilled-labor abundant, choose technologies that are best suited to skilled workers; poor countries, which are unskilled-labor abundant, choose technologies more appropriate to unskilled workers. We discuss alternative explanations, such as capital-skill complementarity and differences in schooling quality.
- DOI
- 10.1257/aer.96.3.499
- Volume
- 96
- Issue
- 3
- Pages
- 499-522
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib bibtex:phds-export.bib