Working Paper: CEPR ID: DP2498
Authors: Daron Acemoglu; Fabrizio Zilibotti
Abstract: Many technologies used by the LDCs are developed in the OECD economies and are designed to make optimal use of the skills of these richer countries' workforces. Differences in the supply of skills create a mismatch between the requirements of these technologies and the skills of LDC workers, and lead to low productivity in the LDCs. Even when all countries have equal access to new technologies, this technology-skill mismatch can lead to sizeable differences in total factor productivity and output per worker. We provide evidence in favour of the cross-industry productivity patterns predicted by our model, and also show that technology-skill mismatch could account for a large fraction of the observed output per worker differences in the data.
Keywords: development; directed technical change; human capital; intellectual property rights; labour productivity; sectoral TFP differences; technology-skill mismatch; total factor productivity
JEL Codes: F43; O14; O34; O47
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| technology mismatch (L15) | lower productivity in LDCs (O49) |
| equal access to technology (L96) | substantial productivity differences (D29) |
| skill availability (J24) | productivity differences (O49) |
| technologies designed for skilled labor (J24) | productivity gaps in LDCs (O49) |
| technology-skill mismatch (J24) | lower TFP in LDCs (O49) |
| technologies biased towards rich economies (O30) | larger output per worker differences (J29) |
| productivity gaps largest in least skill-intensive sectors (J24) | productivity differences between US and developing countries (O49) |