Imported skill-biased technological change in developing countries

Abstract

This paper discusses the occurrence of skill-enhancing technology import, namely, the relationship between imports of embodied technology and widening skill-based employment differentials in low- and middle-income countries. Generalized method of moments (GMM) techniques are applied to an original panel dataset comprising 28 manufacturing sectors for 23 countries over a decade. Econometric results provide robust evidence of the determinants of widening employment differentials in low- and middle-income countries. In particular, the proposed empirical evidence indicates capital-skill complementarity as a possible source of skill bias, while imported skill-enhancing technology emerges as an additional driver of increasing demand for the skilled workers in these countries. © 2011 The Authors. The Developing Economies © 2011 Institute of Developing Economies.