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American Economic Review: Vol. 96 No. 3 (June 2006)

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The World Technology Frontier

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Caselli, Francesco, and Wilbur John Coleman. 2006. "The World Technology Frontier." American Economic Review, 96(3): 499-522.

DOI: 10.1257/aer.96.3.499

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)

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Authors

Caselli, Francesco
Coleman, Wilbur John II


American Economic Review


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