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Does Factor-Biased Technological Change Stifle International Covergence? Evidence from Manufacturing

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Eli Berman

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Abstract

Factor-biased technological change implies divergent productivity growth across countries with different amounts of skill and capital per worker. I estimate the extent of factor bias within industries and countries using a 19-country panel of manufacturing data covering the 1980s. Estimates using both production functions and total factor productivity functions show that technological change is strongly biased against less-skilled workers and toward both skilled workers and capital. An industry or country with twice the capital and skill per less-skilled worker enjoys 1.4%-1.8% faster total factor productivity growth annually due to the effects of factor-bias. These results are consistent with the empirical literature on skill-biased technological change. They may well explain why conditional convergence' of per capita income across countries is so slow.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7964.

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Date of creation: Oct 2000
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Handle: RePEc:nbr:nberwo:7964

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Find related papers by JEL classification:
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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  8. Zvi Griliches & Jacques Mairesse, 1995. "Production Functions: The Search for Identification," Harvard Institute of Economic Research Working Papers 1719, Harvard - Institute of Economic Research.
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  27. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September. [Downloadable!] (restricted)
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  28. Susanto Basu & David N. Weil, 1998. "Appropriate Technology And Growth," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1025-1054, November. [Downloadable!] (restricted)
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  29. Gordon H. Hanson & Ann Harrison, 1995. "Trade, Technology, and Wage Inequality," NBER Working Papers 5110, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Berman, Eli & Somanathan, Rohini & Tan, Hong W., 2005. "Is skill-biased technological change here yet ? Evidence from Indian manufacturing in the 1990," Policy Research Working Paper Series 3761, The World Bank. [Downloadable!]
  2. Pawlik, Konrad, 2005. "How knowledge transfer and absorption impact on the profitability of foreign affiliates in Transition Economy? The case of Poland: 1993-2002," Working Papers 2005-5, University of Aarhus, Aarhus School of Business, Department of Management. [Downloadable!]
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