Can Capital-Skill Complementarity Explain the Rising Skill Premium in Developing Countries? Evidence from Peru in the 1990s
The unsettled discussion continues about the factors behind the increase in the relative wages of skilled workers in developing countries. Using data from Peru for the years 1994 to 2000, we analyze the determinants of within-industry share of skilled workers. We use a translog cost function for gro...
| Main Authors: | , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Pontificia Universidad Católica del Perú
2019-09-01
|
| Series: | Economía |
| Subjects: | |
| Online Access: | http://revistas.pucp.edu.pe/index.php/economia/article/view/21282 |
| _version_ | 1811244549626920960 |
|---|---|
| author | Joy Mazumdar (†) Myriam Quispe-Agnoli |
| author_facet | Joy Mazumdar (†) Myriam Quispe-Agnoli |
| author_sort | Joy Mazumdar (†) |
| collection | DOAJ |
| description | The unsettled discussion continues about the factors behind the increase in the relative wages of skilled workers in developing countries. Using data from Peru for the years 1994 to 2000, we analyze the determinants of within-industry share of skilled workers. We use a translog cost function for gross output and are therefore able to incorporate the effects of materials, both domestic and imported, in addition to capital. We find that capital accumulation can explain a large fraction of the increase in the wage bill share and relative wages of skilled labor. This finding is contrary to the commonly held view that unobservable technological change is responsible for the rising skill premium in both developing and developed economies. A test for separability indicates that a gross output cost function is the appropriate one to use, and therefore share equations based on value-added cost functions could be misspecified. |
| first_indexed | 2024-04-12T14:27:09Z |
| format | Article |
| id | doaj.art-14eff804002540d1a412bf6f0495d608 |
| institution | Directory Open Access Journal |
| issn | 0254-4415 2304-4306 |
| language | English |
| last_indexed | 2024-04-12T14:27:09Z |
| publishDate | 2019-09-01 |
| publisher | Pontificia Universidad Católica del Perú |
| record_format | Article |
| series | Economía |
| spelling | doaj.art-14eff804002540d1a412bf6f0495d6082022-12-22T03:29:24ZengPontificia Universidad Católica del PerúEconomía0254-44152304-43062019-09-01428310.18800/economia.201901.00421282Can Capital-Skill Complementarity Explain the Rising Skill Premium in Developing Countries? Evidence from Peru in the 1990sJoy Mazumdar (†)Myriam Quispe-Agnoli0Mercer University, Eugene W. Stetson School of Business and EconomicsThe unsettled discussion continues about the factors behind the increase in the relative wages of skilled workers in developing countries. Using data from Peru for the years 1994 to 2000, we analyze the determinants of within-industry share of skilled workers. We use a translog cost function for gross output and are therefore able to incorporate the effects of materials, both domestic and imported, in addition to capital. We find that capital accumulation can explain a large fraction of the increase in the wage bill share and relative wages of skilled labor. This finding is contrary to the commonly held view that unobservable technological change is responsible for the rising skill premium in both developing and developed economies. A test for separability indicates that a gross output cost function is the appropriate one to use, and therefore share equations based on value-added cost functions could be misspecified.http://revistas.pucp.edu.pe/index.php/economia/article/view/21282Skill premiumCapital-skill complementarityCapital accumulationPeru |
| spellingShingle | Joy Mazumdar (†) Myriam Quispe-Agnoli Can Capital-Skill Complementarity Explain the Rising Skill Premium in Developing Countries? Evidence from Peru in the 1990s Economía Skill premium Capital-skill complementarity Capital accumulation Peru |
| title | Can Capital-Skill Complementarity Explain the Rising Skill Premium in Developing Countries? Evidence from Peru in the 1990s |
| title_full | Can Capital-Skill Complementarity Explain the Rising Skill Premium in Developing Countries? Evidence from Peru in the 1990s |
| title_fullStr | Can Capital-Skill Complementarity Explain the Rising Skill Premium in Developing Countries? Evidence from Peru in the 1990s |
| title_full_unstemmed | Can Capital-Skill Complementarity Explain the Rising Skill Premium in Developing Countries? Evidence from Peru in the 1990s |
| title_short | Can Capital-Skill Complementarity Explain the Rising Skill Premium in Developing Countries? Evidence from Peru in the 1990s |
| title_sort | can capital skill complementarity explain the rising skill premium in developing countries evidence from peru in the 1990s |
| topic | Skill premium Capital-skill complementarity Capital accumulation Peru |
| url | http://revistas.pucp.edu.pe/index.php/economia/article/view/21282 |
| work_keys_str_mv | AT joymazumdar cancapitalskillcomplementarityexplaintherisingskillpremiumindevelopingcountriesevidencefromperuinthe1990s AT myriamquispeagnoli cancapitalskillcomplementarityexplaintherisingskillpremiumindevelopingcountriesevidencefromperuinthe1990s |