The World Technology Frontier
Francesco Caselli, Wilbur John Coleman II
American Economic Review · 2006 · Volume 96 · Issue 3
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. (JEL E13, E23, J31, O14)
Keywords
Analysis of Education, Human Capital, Skills, Occupational Choice, Labor Productivity, Economic Development: Human Resources, Human Development, Income Distribution, Migration, Technological Change: Choices and Consequences, Diffusion Processes
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