@techreport{Frondel2001Rejecting,
abstract = {Any serious empirical study of factor substitutability has to allow the data to display
complementarity as well as substitutability. The standard approach reflecting this idea is a
translog specification \textendash{} this is also the approach used by numerous studies analyzing the
relative capital-skill complementarity hypothesis formulated by GRILICHES (1969).
According to this hypothesis, the degree of substitutability between skilled labor and capital
is lower than that for unskilled labor and capital. Yet, the results of empirical studies
investigating this hypothesis are controversial. This paper offers a straightforward
explanation: Using a translog approach reduces the issue of factor substitutability or
complementarity to a question of cost shares. Our review of translog studies mentioned in
HAMERMESH?s (1993) summary on the demand for heterogeneous labor demonstrates that
this argument is empirically relevant \textendash{} all these studies can be reconciled with each other on
the basis of the cost-share argument.},
author = {Manuel Frondel and Christoph M. Schmidt},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {D2; C3; 330; Substitutability; Translog Cost Function; Faktorsubstitution; Substitutionselastizit\"{a}t; Kapital; Facharbeiter; Kostenfunktion; Kostenstruktur; Theorie; Welt; Translog Modell; cost shares},
language = {eng},
number = {316},
title = {Rejecting Capital-Skill Complementarity at all Costs},
type = {IZA Discussion paper series},
url = {http://hdl.handle.net/10419/21172},
year = {2001}
}
