Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/114096
Authors: 
Lafortune, Jeanne
Tessada, José
Lewis, Ethan Gatewood
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 9217
Abstract: 
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 less-skilled immigration with a modest decline in less-skilled relative wages. This would not have been possible under the older production technology.
Subjects: 
immigration
capital-skill complementarity
skill-biased technical change
manufacturing
Second Industrial Revolution
JEL: 
J24
N61
O33
Document Type: 
Working Paper

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