Capital-Skill Complementarity:Evidence from Manufacturing Industries in Ghana

Using U.S. manufacturing data, Griliches (1969) found evidence suggesting that capitalequipment was more substitutable for unskilled than skilled labor. Griliches formulated thisfinding as the capital-skill complementarity hypothesis. The purpose of this study is todetermine whether the capital-skill complementarity framework holds for Ghanamanufacturing plants in industry and aggregate level. We use an unbalanced panel of plantleveldata for manufacturing firms in Ghana during the 1991 and 1997 in four industries (foodbakery,textiles-garments, wood-furniture and metal-machinery). Our findings suggest thatcapital-skill complimentarity holds in aggregate level and wood-furniture sector in Ghana.However, we reject the capital-skill complementarity hypothesis for food-bakery, textilegarmentand metal-machinery sectors....