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Daniel J. Henderson
A Nonparametric Examination of Capital-Skill Complementarity
 

Abstract: This paper uses nonparametric kernel methods to construct observation specific elasticities of substitution for a panel of 73 developed and developing countries to examine the capital-skill complementarity hypothesis. The exercise shows weak support for capital-skill complementarity. That being said, the added flexibility of the nonparametric procedure is able to uncover that the elasticities of substitution vary across countries, groups of countries and time periods.

 
JEL: C14, O1.
Keywords: Capital-Skill Complementarity, Elasticity of Substitution.

 

 

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