Machines and machinists: Importing skill-biased technology

Miklós Koren and Márton Csillag

August 2016

Abstract

We show in Hungarian linked employer-employee data for 1992-2003 that machine operators exposed to imported machines earn higher wages than similar workers at similar firms. Using product-specific tariff rates as instruments for importing suggests that the importer wage premium is causal. The returns to skill have increased in our sample between 1992 and 2000. A quarter of the increase can be attributed to greater exposure to imported machines. We build a model to to explain which workers and firms use imported machines and how this affects wages. Our results suggest that imported machines can help propagate skill-biased technical change.

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