Abstract
We estimate the extent of factor bias in technical changes consistent with observed changes in skill premia. To control for the effects of expanded trade on wages we use a structural model with multiple regions and comparative static analysis. Two alternative biased technical-change stories emerge: skill enhancement when capital and skill are substitutes and capital enhancement when capital and skill are complements. These imply different underlying technical-changes processes and macroeconomic behaviour in response to technical-change shocks. Capital enhancement offers the more credible process, however, and is consistent with observed rises in the 'equipment content' of the capital stock.
| Original language | English |
|---|---|
| Journal | Oxford Review of Economic Policy |
| Volume | 16 |
| Issue number | 3 |
| Publication status | Published - 2000 |