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  3. American Economic Journal: Macroeconomics
  4. October 2024
  5. Labor Substitutability among Schooling Groups

American Economic Journal:
Macroeconomics

ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)

Labor Substitutability among Schooling Groups

  • Mark Bils
  • Bariş Kaymak
  • Kai-Jie Wu
American Economic Journal: Macroeconomics
vol. 16, no. 4, October 2024
(pp. 1–34)
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Abstract

Given worldwide trends in education, wage premium for schooling, and real GDP, we derive a lower bound for the long-run elasticity of labor substitution across schooling groups of around 4, which is far higher than values commonly used in the literature. We exploit our bound to reexamine the importance of human capital in cross-country income differences, including the roles of school quality versus the skill bias of technology in the greater efficiency gains from schooling in richer countries.

Citation

Bils, Mark, Bariş Kaymak, and Kai-Jie Wu. 2024. "Labor Substitutability among Schooling Groups." American Economic Journal: Macroeconomics, 16 (4): 1–34. DOI: 10.1257/mac.20220288

Additional Materials

JEL Classification

  • E23 Macroeconomics: Production
  • E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
  • I26 Returns to Education
  • J24 Human Capital; Skills; Occupational Choice; Labor Productivity
  • J31 Wage Level and Structure; Wage Differentials
  • O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration
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