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Skill Biased Technology Transfer EVIDENCE OF FACTOR BIASED TECHNOLOGICAL CHANGE IN DEVELOPING COUNTRIES Eli Berman Boston University National Bureau of Economic Research Stephen Machin University College London Center for Economic Performance London School of Economics January 2000 We have benefitted from the comments of participants in seminars at NBER productivity and labor studies sessions and at the University of Chicago Business School and at Boston University We thank Steve Gibbons Marco Morales Lupin Rahman and Zaur Rzakhanov for research assistance ABSTRACT This paper investigates the skill bias of technological change in developing countries using a global sample of manufacturing industries We report a striking increase in demand for skilled workers in the 1980s in middle income countries GDP capita between 2000 and 10 000 This increase is mostly due to skill upgrading within industries rather than a reallocation of employment from low to high skill industries and cannot be explained by capital skill complementarity thus indicating skill biased technological change Furthermore the same industries within manufacturing that substituted toward skilled labor in middle income countries in the 1980s had been doing so in the U S through the 1960s 1970s and 1980s We conclude that recent skill biased innovations migrated rapidly from developed to middle income countries but find no evidence of transfer to low income countries Eli Berman Boston University eli bu edu http econ bu edu eli Stephen Machin University College London s machin ucl ac uk I INTRODUCTION This paper investigates the role of skill biased technological change in increasing demand for skills in the manufacturing industries of developing countries The effects of technology on relative wages are of particular interest in developing countries for three reasons First if increased demand for skills is exacerbating income inequality in developing countries the social and political implications may be

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