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)
Caselli, Francesco, and Wilbur John ColemanII.
2006."The World Technology Frontier."American Economic Review,