Do People and Machines: A Look at the Evolving Relationship Between Capital and Skill In Manufacturing 1860-1930 Using Immigration Shocks

• Jeanne Lafortune ^[1] ; José Tessada ^[1] ; Ethan Lewis ^[2]
  1. [1] Pontificia Universidad Católica de Chile

     Pontificia Universidad Católica de Chile

     Santiago, Chile

     
  2. [2] Dartmouth College

     Dartmouth College

     Town of Hanover, Estados Unidos

     
• Localización: Documentos de Trabajo ( Instituto de Economía PUC ), ISSN-e 0717-7593, Nº. 463, 2015, págs. 1-93
• Idioma: inglés
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• Resumen

  • This paper estimates the elasticity of substitution between capital and skill using variation across U.S. counties in immigration-induced skill-mix changes between 1860 and 1930. We find that capital began as a q-complement for skilled and unskilled workers, and then dramatically increased its relative complementary with skilled workers around 1890. Simulations of a parametric production function calibrated to our estimates imply the level of capital-skill complementarity after 1890 likely allowed the U.S. economy to absorb the large wave of lessskilled immigration with a modest decline in less-skilled relative wages. This would not have been possible under the older production technology