Capital imports composition, complementarities, and the skill premium in developing countries
Citation
Source Title
Additional URLs
ISSN
Collection
Abstract
© 2015 Elsevier B.V.We study how the composition of capital imports affects relative demand for skill and the skill premium in a sample of developing economies. Capital imports per se do not affect the skill premium; in contrast, their composition does. While imports of R&D-intensive capital equipment raise the skill premium, imports of less innovative equipment lower it. We estimate that R&D-intensive capital is complementary to skilled workers, whereas less innovative capital equipment is complementary to unskilled labor-which explains the composition effect. This mechanism has substantial explanatory power. Variation in tariffs, freight costs and overall barriers to trade, over time and across types of capital, favors imports of skill-complementary capital over other types. We calculate that reductions in barriers to trade increase inequality substantially in developing countries through the composition channel.
Related items
Showing items related by title, author, creator and subject.
-
Gurrib, Muhammad Ikhlaas (2008)This study gives an insight into the behaviour and performance of large speculators and large hedgers in 29 US futures markets. Using a trading determinant model and priced risk factors such as net positions and sentiment ...
-
Geagea, A.; Vernon, Lynette; MacCallum, J. (2019)© 2018, © 2018 HERDSA. For youth in disadvantaged schools, university expectations and participation are often limited by access to social and cultural capital that support expectations. This study investigated the utility ...
-
James, Kieran E. (2005)This research explores the empirical association between takeover bid premium and acquired goodwill, and tests whether the empirical association changes after the passage of approved accounting standard AASB1013: Accounting ...