Kevin Genna*, Yezid Hernandez Luna**

phd seminar

Kevin Genna*, Yezid Hernandez Luna**

The role of the elasticity of substitution in an endogenous growth model of structural change*
The Colombian manufacturing sector: 20 years of openness, unskill-biased technical change and skill premia**
Joint with
Christian Ghiglino, Kazuo Nishimura, Alain Venditti*

IBD Salle 16

Îlot Bernard du Bois - Salle 16

5-9 boulevard Maurice Bourdet
13001 Marseille

Tuesday, March 20 2018| 12:30pm to 2:00pm

Edward Levavasseur: edward.levavasseur[at]
Océane Piétri: oceane.pietri[at]
Morgan Raux: morgan.raux[at]


*We propose a multi-sector model of endogenous growth in which structural change occurs according to a price effect between intermediates inputs. The unique final good, which can be consumed or used as capital, is produced using two intermediate goods, into a CES production function. The two intermediate sectors differ in terms of knowledge accumulation, in sector 1 workers devote a fraction u of their time endowment to knowledge accumulation “à la Romer”; in sector 2 they produce only. In this framework we can consider intermediate goods as complement or substitute; this differentiation leads to two different paths for structural change. We characterize two different Non-Balanced Growth Paths (NBGP) with respect to the value of the elasticity of substitution between our two intermediate goods which are consistent with structural change. Labor and capital are indeed reallocated in the knowledge intensive sector when inputs are substitutes, and in the other sector when they are complements. The aggregate behavior of this model, along the equilibrium path, is also consistent with the Kaldor facts. Additionally we show the persistence of inequalities, in human and physical capital, through the “manifold of steady-states” feature during the growth process, and that there is conditional convergence.

**This article delivers empirical evidence for the Colombian manufacturing sectors, during the period 1992-2012 and the subperiod 2000-2012, on the relationship of international trade and skill intensity over the skill premia. To do that, we consider a methodology widely used to analyze the relationship of the sector skill intensity on skill premia, through the Skill Biased Technical Change. Based on Acemoglu (2003) theory, we interact the skill intensity variable with different measures of international trade, to estimate the effects of both variables on the SBTC, and then, on the skill premia. At the beginning of the 90s, Colombia implemented two major reforms: the trade openness policy and the labor flexibilization reform. Consequently, we propose as well different measures of skill intensity to control for the effect of the latter reform, according with the type of employment contract (fixed term, open ended or temporary agency). For the subperiod, we found evidence for most of the manufacturing sectors that together skill intensity and international trade bring about more SBTC, while for the whole period, the effect on the SBTC is mainly negative. Nevertheless, the relationship of both, changes in international trade and in skill intensity, do not have a clear relationship with changes in the skill premia.